Question: (1) A consumer with vN-M utility function U(;r:) = log(:1:) and initial wealth 'W = $500, 000 faces a probability p : 0.2 of incurring

(1) A consumer with vN-M utility function U(;r:) = log(:1:) and initial wealth 'W = $500, 000 faces a probability p : 0.2 of incurring a monetary loss of d : $200, 000 in an accident. An insurance company offers him insurance at a price '3" for each dollar of coverage. That is, if he wants to get back 3: dollars in case of an accident, he must pay r11: dollars for insurance to the company up front. (a) Assume r = 0.25. How much insurance does he buy? (1)) Assume now that the insurance company is a monopolist that wants to maximize expected prots. 1iiifhat price would the monopolist charge this consumer

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Do not take criticism personally, even if it is meant to be personal.

2. To understand that as a general rule it takes about 3 minutes before the other part(s) have made up a 90% impression of you.

3. To understand that the first impression means a lot, and it takes a lot of energy to change this first impression.