Answer:
The answer is "[tex]r\leq 2.5[/tex]"
Explanation:
Please find the complete question in the attached file.
When x is higher, that insurer's profits are greatly increased. The user wishes to obtain the same quantity in both cases.
[tex]\to 500000-rx = 500000-rx + x- 200,000\\\\\to x = 200000[/tex]
Its usefulness must be greater than 0 if there is no accident.
[tex]\to U(500000-xr)\geq 0\\\\\to \log (500000- r\times 200000) \geq 0 \\\\\to (500000- r\times 200000) \geq 0\\\\\to r\leq 2.5[/tex]
