Question: QUESTION 5 Consider again the consumer from the previous question Suppose a consumer has income $100. If the consumer gets sick, he must go to

 QUESTION 5 Consider again the consumer from the previous question Suppose

QUESTION 5 Consider again the consumer from the previous question Suppose a consumer has income $100. If the consumer gets sick, he must go to the doctor. The cost of a visit to the doctor is $75. The consumer's Utility from Income is =VT The probability of getting sick depends on whether the consumer goes to the gym. of the consumer goes to the gym, then he gets sick with probability 10% If the consumer does not go to the gym, then he gets sick with probability 90% The cost of going to the gym is $10. Now the insurance company offers a new insurance plan, with a copay. The consumer pays a premium 7.5 upfront of the consumer gets sick, then the insurance company fully pays for the doctor. However, when the consumer gets sick, he needs to pay $13 to the insurance company (this is the copy) Compute the consumer's expected walty it he purchases the copay insurance AND goes to the gym: Eu 9.008 Compute the consumer's expected utility if he purchases the copay insurance AND does NOT go to the gym. Eu= 9.008 Will the consumer choose to go to the gym? (select yes or no)

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