Andrew has the utility of wealth curve shown in the above figure. He owns an SUV worth $30,000 and that is his only wealth. There is a 10 percent chance that he will have an accident within a year. If he does have an accident, his SUV is worthless
Suppose all SUV owners are like Andrew. An insurance company agrees to pay each person who has an accident the full value of his/her SUV. The company's operating expenses are $1,500. What is the minimum insurance premium that the company is willing to accept? A) $1,500 per year
B) $4,500 per year
C) $3,000 per year
D) $6,000 per year
B
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Breezey Cola and High-Ten Dew are both large soft drink manufacturers that cover almost the entire market for cola. At the same time, there are 45 small firms that produce pulpy fruit juice. In the given scenario, which of the following statements is true?
a. The cola industry is likely to be a monopoly, while the pulpy juice industry is likely to be monopolistically competitive. b. The cola industry is likely to be monopolistically competitive, while the pulpy juice industry is likely to be an oligopoly. c. The cola industry is likely to be an oligopoly, while the pulpy juice industry is likely to be monopolistically competitive. d. Both industries operate in an oligopolistic market structure.
Which of the following is true?
a. The balance of payments is like a sources and uses of funds statement. b. The balance of payments includes only transactions for which there are financial payments. c. The balance of payments is calculated at a point in time (e.g., amounts at year's end). d. None of the above is correct.