Tutorial assignment 5 Due ot the beginning of your tutorial on Wednesday week 3 1. Mike is going to Lake Taupn and takes $2500 with him. With probability Pi he will lose $1600 on his way. Thus he will spend $2500 on Taupo if he is lucky and only $900 if he is unlucky. His utility from the trip is given by the function U{E)=Em, where E is the amount that he spends on Taupo. a. What is Mike's expected utility from the nip? b. Suppose l'uke can buy an insurance policy that will cover his loss of $1600. 'What price will he be willing to pay for such insurance? c. Suppose insurance market is perfectly competitive so that the insurance is fair. What will be the price of the policy