A consumer has wealth W = Ghc 100 and faces a 50% probability that he will require a surgical procedure which costs Ghc 64. He behaves as if he maximizes his expected utility and his utility
function is U (W) =

(i) Sketch a graph showing the utility function, the consumer's wealth when he does and
does not need surgery, and expected utility as the probability of needing surgery varies
between zero and one.
[2 marks]
(ii) What is the expected loss the consumer faces? Calculate, and indicate on your graph.
[2 marks]
(iii) What is the maximum price he would pay for full insurance Calculate, and indicate on
[2 marks]
your graph.
(iv) A competitive (hence, zero profit), zero cost insurance industry provides only full
[2 marks]
insurance contracts. What is the equilibrium price for full insurance?
(v) Are consumers better off due to the existence of insurance? Briefly explain. [2 marks]​

Match the given situations to the type of risks that a business may face while taking credit.(there's not just one answer)1. beta ltd. had taken a loan from a bankfor a period of 15 years, but its salesare gradually showing a decline.2. alpha ltd. has taken a loan for increasing its production and sales, but it has not conducted any researchbefore making this decision.3. delphi ltd. has an overseas client. the economy of the client’s country is going through severe recession.4. delphi ltd. has taken a short-term loanfrom the bank, but its supply chain logistics are not in place. a. foreign exchange riskb. operational riskc. term of loan riskd. revenue projections risk

True or false: a fitted model with more predictors will necessarily have a lower training set error than a model with fewer predictors.

Suppose there are three types of consumers who attend concerts at your university’s performing arts center: students, staff, and faculty. each of these groups has a different willingness to pay for tickets; within each group, willingness to pay is identical. there is a fixed cost of $1,000 to put on a concert, but there are essentially no variable costs. for each concert: i. there are 140 students willing to pay $20. (ii) there are 200 staff members willing to pay $35. (iii) there are 100 faculty members willing to pay $50. a) if the performing arts center can charge only one price, what price should it charge? what are profits at this price? b) if the performing arts center can price discriminate and charge two prices, one for students and another for faculty/staff, what are its profits? c) if the performing arts center can perfectly price discriminate and charge students, staff, and faculty three separate prices, what are its profits?