Microsoft Word - 2016s_ps1 Consider an individual. She has $10,000 in wealth but no other assets. She faces the risk of a loss of $8,400. This loss...

If the insurer sold her full insurance at this maximum price, what would its expected profit be (looking only at the premium and expected payment to this customer, ignoring any costs associated with paying staff, renting an office, or any other costs)? Consider an individual. She has $10,000 in wealth but no other assets. She faces the risk of a loss of $8,400. This loss will occur half the time, with probability 0.5. She has expected utility...