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Price of consumption goods

    Assignment Instructions

    Assignment ID: FG133134449

    Assume an individual has income of $100,000, and has a 5% chance of incurring a $100,000 loss due to an adverse medical event. His utility function is represented by: U=C14.

    In these problems, you are given income in different “states of the world”. From there, you assume the price of consumption goods is $1 per unit.

    In this set-up, how many units of consumption goods could you buy if there is NOT an adverse medical event?

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