申論題

2. Scott has an expected utility function of U(ω) = V, whereω is his level of wealth. Currently, his only wealth is a store worth 625. The probability that his store will burn is 20%. If a fire occurs, the store will be worth nothing

(D) (6 points) Now suppose that the insurance company is a monopoly that has the market power to set the profit-maximizing prices. What is the most Scott is willing to pay for an insurance policy that would fully reimburse the amount of loss from fire?