Exercise 5: Insurance Consider two individuals, Dave and Eva. Both Dave and Eva have initial wealth 810; 000 and face a 40% chance of losing L = 450; 000. Dave has von Neumann-Morgenstern utility function uD(x) = x and Eva has von Neumann-Morgenstern utility function uE(x) = p x. 1. What do you know about Dave's and Eva's risk preferences? 2. What is the most Dave would be willing to pay for complete insurance against the loss? 3. What is the most Eva would be willing to pay for complete insurance against the loss? Suppose they are each able to choose insurance with any coverage level z 2 [0; 1] (i. e. 0 z 1). If an individual buys insurance coverage at level z, they will get reimbursed 450; 000z if the loss occurs. Insurance coverage at level z costs c(z) = z 200; 000. 4. What coverage level zD would Dave choose? Explain. 5. Based on your previous results, try to explain that Eva chooses a strictly positive coverage zE > 0. 6. Is Eva's optimal choice full insurance, i. e. zE = 1? ECON

After testing its water, a city water department issues a report to the related citizens, noting what chemicals have been identified, their doses, and the estimated risks of exposure at these levels. this report represents a type of

Read the overview below and complete the activities that follow.apartment complexes often look for ways to recruit new tenants and retain current tenants. although apartment complexes offer the tangible benefit of shelter to their tenants, many apartment complexes also offer additional services to tenants to encourage tenants to stay or to support the rent prices. the following scenario identifies the several service gaps of a company that runs an apartment complex as well as solutions for reducing these service gaps.concept review: customers have certain expectations about how a service should be delivered. a service gap occurs when the delivery of a service fails to meet customer expectations. there are four types of service gaps: knowledge gap, standards gap, delivery gap, and the communications gap. it is important for marketers to identify these gaps and develop strategies for minimizing them.match the example or solution to the appropriate service gap category.1. wait for repairs 5. train employees well2. understand expectations 6. incentives for tenants3. do not overpromise 7. family movie night4. empower employees 8. delayed lawn careservice gap example solutionknowledge gap standards gap delivery gap communication gap

How has apple been able to sustain its competitive advantage in the smartphone industry? a. by reducing its network effects b. by targeting its new products and services toward laggards c. by driving the price for the end user to zero d. by regularly introducing incremental improvements in its products