Question: Jon has a utility function expressed by U(W) = square root of W where W is Jon's wealth. Currently, Jon has W = $120. He

Jon has a utility function expressed by U(W) = square root of W where W is Jon's wealth. Currently, Jon has W = $120. He faces potential loss L = $100 with probability p = 0.25.

Jons expected utility is 9.7

Jon wants to purchase insurance against his potential loss. What is the pure premium that would be charged to Jon? (Hint: What is Jons expected loss?)

25 is the answer for this question

If Jon purchases insurance for the pure premium, what is his utility? Jon now pays $25 and the insurance firm will indemnify him for $100 if he experiences the loss.

His utility is, therefore: 9.32

ANSWER THIS QUESTION BELOW PLEASE!

Is Jon better off with insurance than he was without it and What is the most Jon would be willing to pay for insurance?????

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