Question: A house owner plans to buy a fire insurance for his house worth $100000, suppose there is 10% chance of house catching fire which

A house owner plans to buy a fire insurance for his house

A house owner plans to buy a fire insurance for his house worth $100000, suppose there is 10% chance of house catching fire which will cause him damages worth $40000. Find the amount which the person is willing to pay over and above acturially fair price of the fire insurance if his utility function is U= W0.5 (where W = wealth )? 460 4000 4460 500

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