Limit your answer to one page for the math and one page for the graph. Re-solve the Atkinson and Stiglitz
problem from the lecture (chapter 12) presuming the utility function is,
- (35 points) Social Insurance Limit your answer to one page for the moth and one page for the graph.
Re-solve the Atkinson and Stiglitz problem from the lecture (chapter 12) presuming the utility function is,
U(X) = a where U(X) is the utility in any state of the world where the net income is X. Use all of the notation
from the lecture- p. S. al. a: Your solution should include' • the insurance company break-even equation •
an equation for expected utility (using the state utility function) • derive with calculus the optimal insurance
purchase (hint: full insurance) • a graph illustrating the benefit of insurance'