PROBLEM, Microeconomics

Sita expects her future earnings to be worth Rs. 100. If she falls ill, her expected future earning
will be Rs. 25. There is a belief that she may fall ill with probability of , - while the probability of
remaining in good health is . - . Let her utility function be given as U(y) = / 0 +. suppose that an
insurance company offers to fully insure Sita against loss of earnings caused by illness against an
actuarially fair premium.
(a) Will Sita accept the insurance? Explain.
(b) What is the maximum amount that Sita would pay for the insurance?
Posted Date: 9/12/2015 1:01:53 AM | Location : USA







Related Discussions:- PROBLEM, Assignment Help, Ask Question on PROBLEM, Get Answer, Expert's Help, PROBLEM Discussions

Write discussion on PROBLEM
Your posts are moderated
Related Questions
project on visit to village for agriculturebased project

i have 40cm3 of hcl of 1 molarity i want to dilute it to 0.2m can yo please help

Suppose you are a painter, and the price of a gallon of paint increases from $3.00 a gallon t $3.50 a gallon. Your usage of paint drops from 35 gallons to 20 gallons a month. 1. Co

Determinants of reserve price

What barriers to economic growth can be explained using the Harrod-Domar model? Definition and outline of the Harrod-Domar model; growth in national income = savings ratio over

Question: (a) Long Run Incremental Cost (LRIC) is considered as the "gold standard" for setting interconnection charges. Discuss the strengths and weaknesses of the three ap

Services and goods that are used for their ultimate end purpose, meeting some human desire orneed. Consumption may include private consumption (by individuals, financed from their

Causes of inflation: Excessive growth in wages relative to productivity can cause inflationary pressures. This causes aggregate demand to increase relative to aggregate supp


Suppose that Congress increases the minimum wage to $10 an hour. a. Use a supply and demand model for unskilled labor to show the effect on the number of unskilled workers employed