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

Endowendowment, How to solve questions of endowments?

How to solve questions of endowments?

Determinants of private demand - unemployment rate, Determinants of Private...

Determinants of Private Demand - Unemployment Rate Unemployment rates linked to specific courses of study can be useful indicators to determine investment in education. Their

Cost, Relatiön between TC ,TFC and TVC

Relatiön between TC ,TFC and TVC

Simple human capital model, Question 1: i) Use a simple human capital m...

Question 1: i) Use a simple human capital model to explain the rationale for undertaking higher education. ii) Why do some people vary significantly in the amounts of human

Central planning of economic system, Q. Central Planning of economic system...

Q. Central Planning of economic system? Central Planning: An economic system in that crucial decisions regarding consumption, investment, exchange rates, interest rates and pri

Unions, Unions are Organizations of working people which aim to bargain col...

Unions are Organizations of working people which aim to bargain collectively with employers in order to improve workers' bargaining power, regulate working conditions and raise wag

Differentiate between nominal and real exchange rate, Differentiate between...

Differentiate between nominal and real exchange rate.  Nominal exchange rate is the rate which actually prevails in the foreign swap market. The real exchange rate is the rate

Fiscal policy, 3. Which of the following would not be an expansionary fisca...

3. Which of the following would not be an expansionary fiscal policy? a.Increased welfare payments to the poor b.Decreases in federal taxes on corporations c.A balanced budget d.I

Explain the marginal rate of technical substitution, Marginal rate of techn...

Marginal rate of technical substitution in the theory of production is similar to the concept of marginal rate of substituent to in the indifference curve analysis of consumer dema

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