Dan Has a Car Valued at $10,000 That Gives Him

Multiple Choice

Dan has a car valued at $10,000 that gives him a utility of 50 units. There is a 10 percent chance that he will have an accident that will make his car worthless, in which case his utility will be zero. His utility from a wealth of $7,000 is 45 units. The maximum amount Dan will be willing to pay for car insurance is

A) $1,000.
B) $3,000.
C) $7,000.
D) zero.