Problem 1: You probably know about the terrible freezing temperatures. in Texas in February. Freezing temperatures. lead to power outages, frozen and broken water pipes, unsafe drinking water, accidents, hypothermia, and deaths. Here is a brief news story about the natural disaster from the BBC: Texas Weather: President Biden declares maior disaster Use the following scenario to answer four questions: Frozen water pipes can break, leading to damaging and expensive flooding in a house. Suppose you live in Colorado and you earn $50,000 per year. There is a 2% chance that your pipes will freeze each year causing $5,500 in damage. Full in5urance against this type of damage costs 5150 per year. YOur utility from consumption is U = IE. (a) Calculate the expected utility of consumption if you don't buy in5urance. (b) Calculate the expected utility of consumption if you do buy insurance. [c] Will you buy insurance? 1Ii'li'hy or why not? (d) Carefully describe two reasons that may cause you to change your decision to buy insurance in the future. 2 points extra credit: What is the maximum you are willing to pay for this type of insurance