Your Current Disposable Income Is $10,000 $U = \sqrt { I }$

question 44

Multiple Choice

Your current disposable income is $10,000. There is a 10% chance you will get in a serious car accident, incurring damage of $1,900. (There is a 90% chance that nothing will happen.) Your utility function is $U = \sqrt { I }$ ,where I is income. What is the fair price of this policy?

• A)$100
• B)$190
• C)$199
• D)$270

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Definitions:

Budget

An estimate of income and expenditure for a set period of time, often used for planning financial operations.

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The sequence in which questions are presented in a survey or questionnaire, which can influence respondents' answers.

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