Use the following to answer question:
-(Table: The Total Utility of Income After College Expenses)Use Table: The Total Utility of Income After College Expenses.The Smith family will choose to purchase insurance:
A)at any premium.
B)at a premium for which the reduction in risk leaves the expected value of their income after tuition the same.
C)up to but not exceeding the point at which the premium is that of a fair insurance policy.
D)at a premium for which the reduction in risk is that of a fair insurance policy.

Question

Use the following to answer question: 
-(Table: The Total Utility of Income After College Expenses)Use Table: The Total Utility of Income After College Expenses.The Smith family will choose to purchase insurance:
A)at any premium. 
B)at a premium for which the reduction in risk leaves the expected value of their income after tuition the same. 
C)up to but not exceeding the point at which the premium is that of a fair insurance policy. 
D)at a premium for which the reduction in risk is that of a fair insurance policy.

Quizplus · Accepted Answer

The Smith family will opt for insurance at a premium that ensures the expected value of their income after tuition remains unchanged, despite the reduction in risk. This approach balances the cost of insurance with the benefit of reduced financial uncertainty.

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