wns a house that is worth $100,000. There is a 0.1% chance that the house will be ly destroyed by fire, leaving Johnny with $0. Johnny's utility function is u(x) = vx, epresents final wealth. Assuming that Johnny has no other wealth, what's the amount that he would be willing to pay for an insurance policy that completely his house if destroyed by fire? e to answer with the dollar sign and then the number, i.e. $532.17. Be accurate up to d decimal. You should not need to round. Hint: The hundredths place should be 0.

wns a house that is worth $100,000. There is a 0.1% chance that the house will be ly destroyed by fire, leaving Johnny with $0. Johnny's utility function is u(x) = vx, epresents final wealth. Assuming that Johnny has no other wealth, what's the amount that he would be willing to pay for an insurance policy that completely his house if destroyed by fire? e to answer with the dollar sign and then the number, i.e. $532.17. Be accurate up to d decimal. You should not need to round. Hint: The hundredths place should be 0.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter7: Uncertainty

Section: Chapter Questions

Problem 7.2P

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