Question: please answer these two questions 1. Assume a typical individual has the following utility function: u = y.5 where y = income. Assume also that

please answer these two questions

1. Assume a typical individual has the following utility function: u = y.5 where y = income. Assume also that this individual has y = $50, 000 but faces a 15% chance of being involved in an accident that would reduce their income by $5, 000. Faced with this level of uncertainty, what is this persons expected utility?

2. Building off of Q1 above, if someone purchases perfect insurance they now have 100% certainty about what their net income will be. (That is, having insurance holds their net income constant regardless of whether or not they are involved in an accident.) Someones guaranteed utility then becomes: u = (y premium).5 where the term = net income y premium is entered into the utility function in place of y. What is this persons WTP for insurance?1 Please included a figure similar to what was shown in class to convey this point.

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When dealing with the customer, balances the business objectives with the demands of the customer. 119 LEADERSHIP DEVELOPMENT Managing change

Demonstrates a passion for the business and a determination to succeed.

Demonstrates a strong grasp of the implications of performance of each function on other functions within the business.