W 163118-100 docx OX + Sim (18 19/1 2014.docx 开篇 HE 自由度 AAO A.XX A.A.A. Q 四章胜 HIR EXAL 一、总目。 AaBb Aalbcd Question 1. An

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W 163118-100 docx OX + Sim (18 19/1 2014.docx 开篇 HE 自由度 AAO A.XX A.A.A. Q 四章胜 HIR EXAL 一、总目。 AaBb Aalbcd Question 1. An individual with utility function(x, y) - 200 -.-- foces the Iy budget constraint m= px +p, where m is the income, pris the price of goodx and p, is the price of goody * Compute the optimal amount ofx andy when = 100, 11 [15 marks] b. Now derive the demand functions for x andy in terms of and 20 marks] ¿ Explain what a comer solution is, and comment whether a comer solution is possible here 115 marks) Question 2. Bob has an initial wealth of W. however, with probability whe suffers a lot of D and his wealth drops to 11 --D. With the complementary probability, 1 - It, so low occurs and his wealth at He can purchase nrance by paying pounds for 1 pound coverageLeta 60. D) deate the amount of insurance coverage) that he purchases Bob's utility function with respect to corption is given by u(x)=1) Under which condition(s) does Bob puruse full imance, [20 marks] Under which condition(s) does he purchase no invurance at all le=09 [20 mak < Find the optimal coverage when IT-200, D-100 TT = 0.2 and 03 [10 marks O 13 15 TE 1 3 4 % 5 & 7