-John's Utility of Wealth Curve Is Shown in the Above

question 180

Multiple Choice

-John's utility of wealth curve is shown in the above figure. He currently has wealth of $20,000 and there is a 10 percent chance of losing it all. John is

• A) willing to pay any price for insurance.
• B) willing to pay no more than $2,000 for insurance.
• C) willing to pay no more than $3,000 for insurance.
• D) willing to pay $5,000 for insurance.