For questions 8-10 assume that Rosa has a 10% chance of getting sick in the next year. If shegets sick, her medical bills will amount to $3600. She has a wealth of $10,000. Suppose she hasthe utility function u(x) = Vx, where x is her net wealth at the end of the year.What is Rosa's risk premium? (Answer should be a dollar sign followed right after by a wholenumber, i.e. $24)Enter your answer here Some insurance policies have deductibles. A deductible is an amount of a claim not covered byinsurance. It's a fixed portion of the medical bills that the insured person must pay in order tomake a claim to their insurer. Suppose Rosa's insurance company provides two plans. Plan Ahas zero deductibles (good!) but charges a high premium (bad!). Specifically, Plan A charges$591 for full coverage. Plan B has a deductible of $197, but charges a premium of just $199. WillRosa purchase insurance and, if so, which plan?Rosa will not purchase any insuranceRosa will purchase plan ARosa will purchase plan BRosa is indifferent between the two plansO None of the above

to their insurer. Suppose Rosa's insurance company provide uctibles (good!) but charges a high premium (bad!). Specifica overage. Plan B has a deductible of $197, but charges a prer e insurance and, if so, which plan? ot purchase any insurance urchase plan A urchase plan B ifferent between the two plans e above

to their insurer. Suppose Rosa's insurance company provide uctibles (good!) but charges a high premium (bad!). Specifica overage. Plan B has a deductible of $197, but charges a prer e insurance and, if so, which plan? ot purchase any insurance urchase plan A urchase plan B ifferent between the two plans e above

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter7: Uncertainty

Section: Chapter Questions

Problem 7.7P

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