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Willy's Only Source of Wealth Is His Chocolate Factory

question 32

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Willy's only source of wealth is his chocolate factory. He has the utility function pc Willy's only source of wealth is his chocolate factory. He has the utility function pc <sup> </sup> <sub>f</sub> + (1 - p) c <sup> </sup> <sub>nf</sub>, where p is the probability of a flood, 1 - p is the probability of no flood, and c<sub>f</sub> and c<sub>nf</sub> are his wealth contingent on a flood and on no flood, respectively. The probability of a flood is p = . The value of Willy's factory is $500,000 if there is no flood and $0 if there is a flood. Willy can buy insurance where if he buys $x worth of insurance, he must pay the insurance company whether there is a flood or not but he gets back $x from the company if there is a flood. Willy should buy A) no insurance since the cost per dollar of insurance exceeds the probability of a flood. B) enough insurance so that if there is a flood, after he collects his insurance, his wealth will beof what it would be if there were no flood.. C) enough insurance so that if there is a flood, after he collects his insurance, his wealth will be the same whether there was a flood or not. D) enough insurance so that if there is a flood, after he collects his insurance, his wealth will beof what it would be if there were no flood. E) enough insurance so that if there is a flood, after he collects his insurance, his wealth will beof what it would be if there were no flood f + (1 - p) c Willy's only source of wealth is his chocolate factory. He has the utility function pc <sup> </sup> <sub>f</sub> + (1 - p) c <sup> </sup> <sub>nf</sub>, where p is the probability of a flood, 1 - p is the probability of no flood, and c<sub>f</sub> and c<sub>nf</sub> are his wealth contingent on a flood and on no flood, respectively. The probability of a flood is p = . The value of Willy's factory is $500,000 if there is no flood and $0 if there is a flood. Willy can buy insurance where if he buys $x worth of insurance, he must pay the insurance company whether there is a flood or not but he gets back $x from the company if there is a flood. Willy should buy A) no insurance since the cost per dollar of insurance exceeds the probability of a flood. B) enough insurance so that if there is a flood, after he collects his insurance, his wealth will beof what it would be if there were no flood.. C) enough insurance so that if there is a flood, after he collects his insurance, his wealth will be the same whether there was a flood or not. D) enough insurance so that if there is a flood, after he collects his insurance, his wealth will beof what it would be if there were no flood. E) enough insurance so that if there is a flood, after he collects his insurance, his wealth will beof what it would be if there were no flood
nf, where p is the probability of a flood, 1 - p is the probability of no flood, and cf and cnf are his wealth contingent on a flood and on no flood, respectively. The probability of a flood is p = Willy's only source of wealth is his chocolate factory. He has the utility function pc <sup> </sup> <sub>f</sub> + (1 - p) c <sup> </sup> <sub>nf</sub>, where p is the probability of a flood, 1 - p is the probability of no flood, and c<sub>f</sub> and c<sub>nf</sub> are his wealth contingent on a flood and on no flood, respectively. The probability of a flood is p = . The value of Willy's factory is $500,000 if there is no flood and $0 if there is a flood. Willy can buy insurance where if he buys $x worth of insurance, he must pay the insurance company whether there is a flood or not but he gets back $x from the company if there is a flood. Willy should buy A) no insurance since the cost per dollar of insurance exceeds the probability of a flood. B) enough insurance so that if there is a flood, after he collects his insurance, his wealth will beof what it would be if there were no flood.. C) enough insurance so that if there is a flood, after he collects his insurance, his wealth will be the same whether there was a flood or not. D) enough insurance so that if there is a flood, after he collects his insurance, his wealth will beof what it would be if there were no flood. E) enough insurance so that if there is a flood, after he collects his insurance, his wealth will beof what it would be if there were no flood . The value of Willy's factory is $500,000 if there is no flood and $0 if there is a flood. Willy can buy insurance where if he buys $x worth of insurance, he must pay the insurance company Willy's only source of wealth is his chocolate factory. He has the utility function pc <sup> </sup> <sub>f</sub> + (1 - p) c <sup> </sup> <sub>nf</sub>, where p is the probability of a flood, 1 - p is the probability of no flood, and c<sub>f</sub> and c<sub>nf</sub> are his wealth contingent on a flood and on no flood, respectively. The probability of a flood is p = . The value of Willy's factory is $500,000 if there is no flood and $0 if there is a flood. Willy can buy insurance where if he buys $x worth of insurance, he must pay the insurance company whether there is a flood or not but he gets back $x from the company if there is a flood. Willy should buy A) no insurance since the cost per dollar of insurance exceeds the probability of a flood. B) enough insurance so that if there is a flood, after he collects his insurance, his wealth will beof what it would be if there were no flood.. C) enough insurance so that if there is a flood, after he collects his insurance, his wealth will be the same whether there was a flood or not. D) enough insurance so that if there is a flood, after he collects his insurance, his wealth will beof what it would be if there were no flood. E) enough insurance so that if there is a flood, after he collects his insurance, his wealth will beof what it would be if there were no flood whether there is a flood or not but he gets back $x from the company if there is a flood. Willy should buy

Definitions:

Ota Benga

A Congolese Mbuti pygmy who was displayed in an American zoo in the early 20th century, illustrating historical instances of human mistreatment and racial injustice.

Bronx Zoo

A renowned zoo located in the Bronx, a borough of New York City, known for its large and diverse collection of animals, as well as its efforts in wildlife conservation.

World's Fair

Large international exhibitions designed to showcase achievements of nations in the fields of science, technology, culture, and art.

Genetic Variation

The natural differences in genes among individuals of a species.

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