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

Multiple Choice

-Andrew has the utility of wealth curve shown in the above figure. He owns an SUV worth $30,000, and that is his only wealth. There is a 10 percent chance that he will have an accident within a year. If he does have an accident, his SUV is worthless. Suppose all SUV owners are like Andrew. An insurance company agrees to pay each person who has an accident the full value of their SUV. The company's operating expenses are $1,500. Andrew will ________ the company's policy because the minimum insurance premium that the company is willing to accept is ________ the maximum premium that Andrew is willing to pay.

A) buy; by $1,500 lower than
B) buy; the same as
C) not buy; $500 higher than
D) not buy; $1,500 higher than