What is the difference between insurable and uninstallable risk?
What will be an ideal response?
Insurable risk means that the risk can be estimated and a payment can be made for insurance to protect against any loss that arises. Uninstallable risk is not predictable or cannot be reasonably estimated, and thus no insurance protection can be provided. In the case of fire, theft, or accidents, it is possible to purchase insurance to provide protection should a loss arise from one of those types of problems.
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Refer to Figure 12-5. If the firm's fixed cost increases by $1,000 due to a new environmental regulation, what happens in the diagram above?
A) Only the average variable cost and average total cost curves shift upward; marginal cost is not affected. B) All the cost curves shift upward. C) Only the average total cost curve shifts upward; the marginal cost and average variable cost curves are not affected. D) None of the curves shifts; only the fixed cost curve, which is not shown here, is affected.
In a monopolistically competitive market, the consumer receives the benefit of
A) production at minimum average cost. B) production where price equals marginal cost. C) product differentiation. D) allocative efficiency.