Question: 1) An individual has the following utility function:U = 2*[Y^(0.3)] (i.e. 2 x Y raised to the 0.3 power), where Y is the amount of

1) An individual has the following utility function:U = 2*[Y^(0.3)] (i.e. 2 x Y raised to the 0.3 power), where Y is the amount of the individual's income in any given period.The individual's income is $60,000 per year, and during that time, there is a 5% probability of a serious medical eventthat would cost the individual $24,000 in medical expenses.

What is the individual's expected utility?

2) Given the information in the previous question, what is the maximum the individual would be willing to pay for insurance?

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