Question: A individual has a utility function u(c) = c, where c is the individual's consumption. (The individual consumes his entire wealth.) The individual's wealth is

A individual has a utility function u(c) = c, where c is the individual's consumption. (The individual consumes his entire wealth.) The individual's wealth is $40,000 per year. However, there is a 2% chance that he will be involved in a catastrophic accident that will cost him $30,000

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