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Suppose the representative person utility depends on income according to: 蜉 If there is a 80%...

Suppose the representative person utility depends on income according to:
蜉

If there is a 80% change of good health resulting in an income of $120,000 and a 20% chance of poor health resulting in an income of $25,000

a. Find their expected income.




b. Calculate the expected utility.




c. Find the certainty equivalence.




d. What is the most that this person would pay for insurance?

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