Stephanie's Utility Function Is Given by U = W^1/2 where

question 31

Multiple Choice

Stephanie's utility function is given by U = W^1/2 where W is the value of her house. She is considering whether to buy tornado insurance for her house. Her house is currently valued at
$105,625. She knows that her house will be destroyed by a tornado with probability .10 this spring. If it is hit, the rubble will be worth $15,625. What is the maximum amount that she is willing to pay for insurance if the insurance company pays $46875 and refunds her insurance premium in case of a tornado?

• A)2,345
• B)1,055
• C)8,835
• D)10,995

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Definitions:

Individual Characteristics

Traits or features that distinguish one person from another, including physical, psychological, and behavioral attributes.

Basic Needs

Fundamental requirements necessary for individuals to maintain a minimal standard of well-being, typically including food, water, shelter, and clothing.

Meals Assistance

The provision of help with food preparation and feeding for individuals who are unable to do so themselves due to physical or cognitive limitations.

Family Nutrition

The study and practice of planning and consuming a balanced diet to ensure optimal health and wellbeing for all family members, considering their diverse nutritional needs.