Exercise 2.16 Consider again the information given in Exercise 2.14: Tom's entire wealth consists of a boat which is worth $38,000; he is worried about the possibility of a hurricane damaging the boat, in which case it would cost him $25,000 to repair the boat; the probability of a hurricane hitting his area is 12%. He is considering two insurance contracts: contract B, with premium $2,000 and deductible $9,000, and contract C, with premium $3,000 and zero deductible. (a) If Tom were to purchase contract B, what would the expected profit be for the insurance company? (b) If Tom were to purchase contract C, what would the expected profit be for the insurance company? (c) What is the slope of an isoprofit line? (d) Find the equation of the isoprofit line that goes through contract B and draw it in a wealth diagram. (e) Find the equation of the isoprofit line that goes through contract C and draw it in a wealth diagram