B) Harley's current wealth is $600, but there is a .25 probability that he will lose $100. Harley is risk averse. He has an opportunity to buy insurance that would restore his $100 if he loses it. a)Harley would be willing to pay a bit more than $25 for this insurance b)Harley would be willing to pay up to $25 for this insurance c)Since Harley is risk averse, he would not be willing to pay anything for this insurance, it is too risky. d)Since Harley's utility function is not specified, we cannot tell how much he would be willing to pay for this insurance. e)Harley would not be willing to pay more than $16.66 for this insurance.

Special order carson manufacturing, inc., sells a single product for $36 per unit. at an operating level of 8,000 units, variable costs are $18 per unit and fixed costs $10 per unit. carson has been offered a price of $20 per unit on a special order of 2,000 units by big mart discount stores, which would use its own brand name on the item. if carson accepts the order, material cost will be $3 less per unit than for regular production. however, special stamping equipment costing $4,000 would be needed to process the order; the equipment would then be discarded. assuming that volume remains within the relevant range, prepare an analysis of differential revenue and costs to determine whether carson should accept the special order. use a negative sign with answer to only indicate an income loss from special order; otherwise do not use negative signs with your answers.