Steve Greene is considering purchasing fire insurance for his home. According to statistics for Steve’ scounty, Steve estimates the damage from fire to his home in a given year is as follows: a. If...

Steve Greene is considering purchasing fire insurance for his home. According to statistics for Steve’ scounty, Steve estimates the damage from fire to his home in a given year is as follows:

a. If Steve is risk neutral, how much should he be willing to pay for the fire insurance?

 b. Suppose Steve’s utility values are as follows:

What is the expected utility corresponding to fire damage?

c. Determine approximately how much Steve would be willing to pay for the fire insurance.