Consider the setup from Question 1. A risk-neutral insurance company is willing to insure the car at the premium of a = £2/3 for every one pound of coverage. How much insurance coverage will the...

Setup from Question 1) An expected utility maximiser owns a car worth £60 000 and has a bank account with £20 000. The money in the bank is safe, but there is a 50% probability that the car will be stolen. The utility of wealth for the agent is u(y) = In(y) and they have no other assets.

Question 2)

Extracted text: Consider the setup from Question 1. A risk-neutral insurance company is willing to insure the car at the premium of a = £2/3 for every one pound of coverage. How much insurance coverage will the individual choose to buy? O a. £30000 O b. £40 000 O c. £80 000 O d. £60 000