申論題

3. Mary spends $150 to buy a new car. She gets utility from the value of her assets (X). We can know the utility function of Mary is U(X)=50+2X. The probability of a car accident is 20%. If Mary gets into a car accident, she would lose $50.

(1) If Mary can use $5 to purchase the insurance to avoid her loss. Should Mary purchase the insurance? (3%)