Suppose Diane's utility function is U=VIncome . Diane earns an income of 00, but there is a 15% chance that she will get sick and have a $62,400 medical bill. alth insurance company, DenialCare, will offer her a health insurance policy to pay medical bills. What would an actuarially fair premium be and what is the im she would be willing to pay for the insurance?

Suppose Diane's utility function is U=VIncome . Diane earns an income of 00, but there is a 15% chance that she will get sick and have a $62,400 medical bill. alth insurance company, DenialCare, will offer her a health insurance policy to pay medical bills. What would an actuarially fair premium be and what is the im she would be willing to pay for the insurance?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter7: Uncertainty

Section: Chapter Questions

Problem 7.8P

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