Sam's utility of wealth function is U(w) = 15 
. Sam owns and operates a farm. He is concerned that a flood may wipe out his crops. If there is no flood, Sam's wealth is $360,000. The probability of a flood is 1/15. If a flood does occur, Sam's wealth will fall to $160,000. Calculate the risk premium Sam is willing to pay for flood insurance.
Definitions:
American Economy
The economic system of the United States, characterized by a mixed economy with private freedom combined with centralized economic planning and government regulation.
Massive Corporations
Large-scale businesses or companies that operate in multiple countries, often having significant influence on the global economy.
Unions
Organizations formed by workers from related fields who join together to advocate for better working conditions, wages, and benefits.
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