PROBLEM, Microeconomics

Assignment Help:
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?

Related Discussions:- PROBLEM

Model of corruption with theft, Consider the model of corruption explored b...

Consider the model of corruption explored by Shleifer and Vishni's where there is one government-produced good X. There is a demand for that good described by the inverse demand eq

Structural unemployment, Structural Unemployment: This is unemploymen...

Structural Unemployment: This is unemployment resulting from changes in the pattern of demand for goods and services or changes in technology.These changes may in turn alter

Common property resource management, Normal 0 false false f...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Cost-of-living indexes, COST-OF-LIVING INDEXES   * The CPI is computed e...

COST-OF-LIVING INDEXES   * The CPI is computed each year as the ratio of cost of a typical group of consumer goods and services today in comparison to the cost during a base per

Analytical framework- shapes of graphs, ive been asked to compare shapes of...

ive been asked to compare shapes of graphs e.g. constant slopes increasing, decreasing, inelastc using the concepts of marginal and average changes?

Sources of finance to business enterprises, explanation of sources of finan...

explanation of sources of finance to business enterprises in Nigeria

Pooling, pooling in insurance

pooling in insurance

Administrative reforms - economic policy, ADMINISTRATIVE REFORMS - ECONOMIC...

ADMINISTRATIVE REFORMS - ECONOMIC POLICY: During the last few decades, phenomenal changes are taking place at a fast rate in the field of science and technology as well as in

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd