Consumers in a competitive insurance market receive utility from wealth given by: U(w) = log(1+1 w)...
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Consumers in a competitive insurance market receive utility from wealth given by: U(w) = log(1+1 w) Wealth is random and consumers without insurance will receive either a units of wealth in the bad state of the world or units of wealth in the good state. There are two types of insurance consumers: high-risk (Type H) and low-risk (Type L). For high-risk consumers, the bad state occurs with probability and for low-risk consumers, the probability of the bad state is where TL < TH- Consumers obtain insurance policies from competitive insurance companies. A policy specifies a premium f that is paid to the insurance company in the good state and a claim c that is paid to the consumer in the bad state. Therefore, a consumer with insurance will receive: x=a+c in the bad state and y=:-f in the good state. Suppose that: parameter a z TH TL value 5 25 0.5 0.25 Suppose insurance companies can perfectly observe the types of insurance consumers. Q1.1 1 Point Find the value for that a Type H consumer will receive from an insurance contract in the competitive insurance market. Round your answer to at least three decimal places. Enter your answer here Save Answer Q1.2 1 Point Find the value for y that a Type H consumer will receive from an insurance contract in the competitive insurance market. Round your answer to at least three decimal places. Enter your answer here Save Answer Q1.3 1 Point Find the value for c that a Type H consumer will receive from an insurance contract in the competitive insurance market. Round your answer to at least three decimal places. Enter your answer here Save Answer Q1.4 1 Point Find the value for f that a Type H consumer will receive from an insurance contract in the competitive insurance market. Round your answer to at least three decimal places. Enter your answer here Save Answer Q1.5 1 Point Find the value for that a Type L consumer will receive from an insurance contract in the competitive insurance market. Round your answer to at least three decimal places. Enter your answer here Save Answer Q1.6 1 Point Find the value for y that a Type L consumer will receive from an insurance contract in the competitive insurance market. Round your answer to at least three decimal places. Enter your answer here Save Answer Q1.7 1 Point Find the value for c that a Type L consumer will receive from an insurance contract in the competitive insurance market. Round your answer to at least three decimal places. Enter your answer here Save Answer Q1.8 1 Point Find the value for f that a Type L consumer will receive from an insurance contract in the competitive insurance market. Round your answer to at least three decimal places. Enter your answer here Save Answer Consumers in a competitive insurance market receive utility from wealth given by: U(w) = log(1+1 w) Wealth is random and consumers without insurance will receive either a units of wealth in the bad state of the world or units of wealth in the good state. There are two types of insurance consumers: high-risk (Type H) and low-risk (Type L). For high-risk consumers, the bad state occurs with probability and for low-risk consumers, the probability of the bad state is where TL < TH- Consumers obtain insurance policies from competitive insurance companies. A policy specifies a premium f that is paid to the insurance company in the good state and a claim c that is paid to the consumer in the bad state. Therefore, a consumer with insurance will receive: x=a+c in the bad state and y=:-f in the good state. Suppose that: parameter a z TH TL value 5 25 0.5 0.25 Suppose insurance companies can perfectly observe the types of insurance consumers. Q1.1 1 Point Find the value for that a Type H consumer will receive from an insurance contract in the competitive insurance market. Round your answer to at least three decimal places. Enter your answer here Save Answer Q1.2 1 Point Find the value for y that a Type H consumer will receive from an insurance contract in the competitive insurance market. Round your answer to at least three decimal places. Enter your answer here Save Answer Q1.3 1 Point Find the value for c that a Type H consumer will receive from an insurance contract in the competitive insurance market. Round your answer to at least three decimal places. Enter your answer here Save Answer Q1.4 1 Point Find the value for f that a Type H consumer will receive from an insurance contract in the competitive insurance market. Round your answer to at least three decimal places. Enter your answer here Save Answer Q1.5 1 Point Find the value for that a Type L consumer will receive from an insurance contract in the competitive insurance market. Round your answer to at least three decimal places. Enter your answer here Save Answer Q1.6 1 Point Find the value for y that a Type L consumer will receive from an insurance contract in the competitive insurance market. Round your answer to at least three decimal places. Enter your answer here Save Answer Q1.7 1 Point Find the value for c that a Type L consumer will receive from an insurance contract in the competitive insurance market. Round your answer to at least three decimal places. Enter your answer here Save Answer Q1.8 1 Point Find the value for f that a Type L consumer will receive from an insurance contract in the competitive insurance market. Round your answer to at least three decimal places. Enter your answer here Save Answer
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Q11 A Type H consumer will receive a value of 0125 from an insurance contract in the competitive insurance market Show your calculations to arrive at 0125 In the bad state a Type H consumer will recei... View the full answer
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