Refer to the Data Provided in Table 17 -Refer to Table 17

question 13

Multiple Choice

Refer to the data provided in Table 17.1 below to answer the following question(s) . The table shows the relationship between income and utility for Jane.
Table 17.1
$$\begin{array} { | r | c | } \hline \text { Income } & \text { Total Utility } \\\hline \$ 0 & 0 \\\hline \$ 20,000 & 25 \\\hline \$ 40,000 & 45 \\\hline \$ 60,000 & 60 \\\hline \$ 80,000 & 70 \\\hline\end{array}$$
-Refer to Table 17.1. Suppose Jane has a 1/3 chance of becoming disabled in any given year. If she does become disabled, she will earn $0. If Jane does not become disabled, she will earn her usual salary of $60,000. Jane has the opportunity to purchase disability insurance for $20,000 which will pay her her full salary in the event she becomes disabled. Jane's utility per year with the policy is ________ and her expected utility without the policy is ________.

• A) 45; 40
• B) 45; 45
• C) 60; 40
• D) 20; 45

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Definitions:

Severe Recession

An intense period of economic decline characterized by significant reductions in GDP, high unemployment, and contracting business activities.

Economic Condition

The state of an economy at a given time, including factors such as growth rate, inflation, employment levels, and overall economic health.

Unemployment Rate

The percentage of the labor force that is jobless and actively seeking employment.

Income Inequality

The unequal distribution of income within a population, often measured by various statistical tools and indicative of economic disparity.