Suppose all individuals have a utility function of u = √c, where c is the amount of consumption a person has in any given period. there are two types of people: those at high risk, with a 4% chance of accident, and those at low risk, with a 2% chance of accident. half of individuals are high risk, and half are low risk. the income of all individuals is $40,000 per year, and a catastrophic accident costs $30,000. calculate the actuarially fair full insurance premium for each type of person, assuming the insurance company can identify who is high risk and who is low risk.

Magic realm, inc., has developed a new fantasy board game. the company sold 15,000 games last year at a selling price of $20 per game. fixed expenses associated with the game total $182,000 per year, and variable expenses are $6 per game. production of the game is entrusted to a printing contractor. variable expenses consist mostly of payments to this contractor. required: 1-a. prepare a contribution format income statement for the game last year.1-b. compute the degree of operating leverage.2. management is confident that the company can sell 58,880 games next year (an increase of 12,880 games, or 28%, over last year). given this assumption: a. what is the expected percentage increase in net operating income for next year? b. what is the expected amount of net operating income for next year? (do not prepare an income statement; use the degree of operating leverage to compute your answer.)