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

question 2

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:

Efficient Method

A process or technique that achieves a goal with minimal waste of time, resources, or energy, maximizing productivity and effectiveness.

Incentive to Cheat

A motivation or reason for individuals or entities to break rules or agreements to gain an advantage.

Population Growth

The increase in the number of individuals in a population, driven by factors like birth rates, mortality rates, and migration.

Protect the Atmosphere

Initiatives or measures undertaken to preserve and protect the earth's atmosphere from pollution and degradation.