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-Ashton Has the Utility of Wealth Curve Shown in the Above

Question 123

Multiple Choice

-Ashton has the utility of wealth curve shown in the above figure. He owns a sports car worth $30,000, and that is his only wealth. Ashton is a careless driver and there is a 30 percent chance that he will have an accident within a year. If he does have an accident, his car is worthless. The maximum amount that Ashton is willing to pay for auto insurance is A) $6,000 per year. B) $3,000 per year. C) $9,000 per year. D) $10,000 per year.
-Ashton has the utility of wealth curve shown in the above figure. He owns a sports car worth $30,000, and that is his only wealth. Ashton is a careless driver and there is a 30 percent chance that he will have an accident within a year. If he does have an accident, his car is worthless. The maximum amount that Ashton is willing to pay for auto insurance is


A) $6,000 per year.
B) $3,000 per year.
C) $9,000 per year.
D) $10,000 per year.

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