Question: Can someone explain to me how to solve this problem and show all work 8. Salvage Value Consider a risk-averse household. In the event that

Can someone explain to me how to solve this problem and show all work

8. Salvage Value Consider a risk-averse household. In the event that this household totals a car, the car becomes completely worthless that is, the value is zero. Suppose, however, that there is a salvage value that the crashed car can be sold for a positive scrap value. What would happen to the risk premium and the demand for insurance? Explain verbally and graphically

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