Suppose individuals have utility function given by U(W)=W (Utility is equal to the square root of Wealth) and is thinking about buying health insurance. Individuals start with a wealth of $100 and face a 20% probability of getting ill. If they do get ill, they suffer losses $36. Suppose there is an insurance company that is willing to offer full insurance to the consumer (they will cover all the losses from illness if the consumer does gets ill).

(10 points) What is the maximum amount of money the consumer would be willing to pay for full insurance?

(10 points) If the insurance company can extract the full willingness to pay by the consumer how much money will they make on each consumer.