Resources are divided into the following broad categories:
a. people, money, and machines
b. saving, spending, investment, and capital
c. human, technological, and government
d. natural resources, labor, capital, and entrepreneurial ability
e. free, scarce, abundant, and unlimited
D
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Why do firms in oligopoly face a temptation to collude?
What will be an ideal response?
Suppose there are two drivers, Jermaine and Janet. Jermaine is not a very safe driver. In fact, there is a 7.5% chance that he will have an accident within the next year. Janet is a relatively safe driver. Her chances of having an accident in the next year are only 1%. If Jermaine is involved in an accident, he will cost the insurance company $1,000,000. If Janet is involved in an accident, she will only cost the company $500,000. What is the expected pay-out that the company can expect from insuring these two?
What will be an ideal response?