Roulan has wealth of $40,000 as long as his business does not burn down. However, there is a 50% probability that his business will burn down and cause a $30,000 loss, leaving her with $10,000 of wealth. Roulan's utility function is given by U = W^0.5, where W is wealth. What is the maximum price that Roulan would pay for full insurance that covers the potential $30,000 loss?

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The Answer of Roulan has wealth of $40,000 as long as his business does not burn down. However, there is a 50% probability that his business will burn down and cause a $30,000 loss, leaving her with $10,000 of wealth. Roulan's utility function is given by U = W^0.5, where W is wealth. What is the maximum price that Roulan would pay for full insurance that covers the potential $30,000 loss?

Roulan Has Wealth of $40,000 as Long as His Business