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-Jennifer Has the Utility of Wealth Curve Shown in the Figure

Question 3

Multiple Choice

-Jennifer has the utility of wealth curve shown in the figure above. She owns a car worth $15,000, and that is her only wealth. There is a 10 percent chance that Jennifer will have an accident within a year. If she does have an accident, her car is worthless. The maximum amount that Jennifer is willing to pay for auto insurance is A) $3,500. B) $2,000. C) $4,500. D) $9,000.
-Jennifer has the utility of wealth curve shown in the figure above. She owns a car worth $15,000, and that is her only wealth. There is a 10 percent chance that Jennifer will have an accident within a year. If she does have an accident, her car is worthless. The maximum amount that Jennifer is willing to pay for auto insurance is


A) $3,500.
B) $2,000.
C) $4,500.
D) $9,000.

Correct Answer:

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