Rosie's utility-of-wealth function is U(w) = 1 1/(w + 1). Her current wealth is $100, but with probability 0.1 an accident will reduce her wealth to $15, as summarized by Table below. State Probability Wealth No accident 0.9 $100 Accident 0.1 $15 Suppose that a dollar of insurance coverage costs 20 cents. a. Is Rosie risk-averse? 3 Continued overleaf b. If possible, find a different insurance price such that it is more favourable to Rosie, but the insurance firm still maintains positive profits (make Rosie a better offer than you competitor). Prove that Rosie will be better-off by comparing her utility in both cases. Compare the insurance firm's profits as well. C. What is the minimum insurance price that an insurance firm will be willing to offer? Will it change if Rosie has a different utility function