Business, 14.11.2019 21:31, melly6317

)ralph’s utility function is the square root of his consumption: ) = √c. he currently works and receives a weekly salary of m = $900. there is a 20% chance that he will be get the floor blues flu, which requires him to stay home this week and receive no income. ralph has the option to purchase k dollars of insurance (0 ≤ k ≤ m), where each dollar of insurance costs $0.20. what is the expected value of ralph's weekly salary without insurance? what is the expected value of ralph's weekly salary with insurance? what is the expected utility for ralph each week without insurance? what is the expected utility for ralph each week with insurance? would ralph's choice of whether or not to insure change if he was risk-neutral instead? why?

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)ralph’s utility function is the square root of his consumption: ) = √c. he currently works and rec...