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| State regulation mandates that every customer must pay the same premium regardless of his or her group, and this premium must be sufficient to cover all expected claims from those who purchase insurance from No- State. There are no additional costs to the company other than paying off claims. All consumers have the following utility function (U): U = W0.5 W is the consumer’s wealth as represented by the value of the car. What premium should No-State offer for full- coverage insurance? |
