申論題

3. Mary spends $150 to buy a new car. She gets utility from the value of her assets (X). We can know the utility function of Mary is U(X)=50+2X. The probability of a car accident is 20%. If Mary gets into a car accident, she would lose $50.

(2) Mary drives less carefully after purchasing the insurance. The probability of a car accident increases to 30%. The insurance company also increases Mary's insurance fee from $5 to $20. Should Mary purchase the insurance? (3%) What is the fair insurance fee in this condition? (3%)