-Van, Whose Utility of Wealth Curve Is Shown in the Above

question 116

Multiple Choice

-Van, whose utility of wealth curve is shown in the above figure, owns a home that is valued at $100,000. Initially there is a 10 percent chance that the house will be destroyed by hurricane. As the risk of destruction due to hurricane rises from 10 percent to 20 percent, the minimum cost of insurance

• A) stays the same.
• B) increases by $10,000.
• C) increases by $20,000.
• D) increases by $30,000.

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Definitions:

Reconstruction

The period from 1865-1877 following the American Civil War, during which the Southern states were reorganized and reintegrated into the Union.

Waving the Bloody Shirt

A phrase that originated in the post-Civil War era representing the use of war memories or martyrs to galvanize public opinion or garner support, typically for political purposes.

Ku Klux Klan

A white supremacist group founded in the 19th century that advocates for white dominance and has historically used terrorism to achieve its goals.

Secession

The withdrawal of a group from a larger entity, especially a political entity, often used in the context of the southern states leaving the Union before the American Civil War.