Refer to the scenario above. The interest that you will earn, after a year, is equal to:

Johnny owns a house that would cost $100,000 to replace should it ever be destroyed by fire. There is a 0.1% chance that the house could be destroyed during the course of a year. Johnny's utility function is U = W0.5

How much would fair insurance cost that completely replaces the house if destroyed by fire? Assuming that Johnny has no other wealth, how much would Johnny be willing to pay for such an insurance policy? Why the difference?

Italy has a comparative advantage in the production of

A. beer.
B. pizza.
C. both beer and pizza.
D. neither beer nor pizza.