Jon has a utility function expressed by U$($W$)=$where W is Jon's wealth. Currently, Jon has W $=$ $$120.$ He faces potential loss L $=$ $$100$ with probability p $=0\mathrm{.}25.$

What is Jon$$s expected utility $9\mathrm{.}7$

Jon wants to purchase insurance against his potential loss. What is the pure premium that would be charged to Jon? $$25$

Jon now pays $$25$ and the insurance firm will indemnify him for $$100$ if he experiences the loss.

His utility is$,$ therefore: $9\mathrm{.}33$

Question:

$1$ What is the most Jon would be willing to pay for insurance?

$2$ Is Jon better off with insurance than he was without it$?$