Use the Following to Answer Questions

question 116

Multiple Choice

Use the following to answer questions:
-(Table: Income and Utility for Tyler) The table Income and Utility for Tyler shows the utility Tyler receives at various income levels, but she does not know what her income will be next year. There is a 40% chance her income will be $20,000, a 40% chance her income will be $30,000, and a 20% chance her income will be $40,000. What is the maximum amount of insurance Tyler would be willing to pay to guarantee an income of $28,000?

• A) $0
• B) $1,484
• C) $26,516
• D) $126

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Definitions:

Loyalists

Colonists in America who remained loyal to the British Crown before and during the American Revolutionary War, opposing the revolution.

Independence

The state of being self-governing and autonomous, free from external control.

British Monarchy

The constitutional monarchy ruling over the United Kingdom and its overseas territories, with a history that stretches back over a thousand years.

Articles of Confederation

The first constitution of the United States, ratified in 1781, which created a loose confederation of sovereign states and a weak central government.