Refer to the data provided in Table 17.4 below to answer the following question(s). The table shows the relationship between income and utility for Celeste.Table 17.4 IncomeTotal Utility $0 0 $40,00050 $80,00090$120,000120$160,000140Refer to Table 17.4. Suppose Celeste has a 1/3 chance of becoming disabled in any given year. If she does become disabled, she will earn $0. If Celeste does not become disabled, she will earn her usual salary of $120,000. Celeste has the opportunity to purchase disability insurance which will pay her her full salary in the event she becomes disabled. On average, such a contract would cost the insurance company ________ per insured person.
A. $40,000
B. $60,000
C. $80,000
D. $120,000
Answer: A
You might also like to view...
How does a firm raise external funds through direct finance?
What will be an ideal response?
The crowding-in effect depends on the sensitivity of investment to
a. GDP, as does the crowding-out effect. b. interest rates, whereas the crowding-out effect depends on the sensitivity of investment to GDP. c. interest rates, as does the crowding-out effect. d. GDP, whereas the crowding-out effect depends on the sensitivity of investment to interest rates.
Suppose the global market for personal computers is monopolistically competitive. If a country engages in a two-way trade in personal computers, such trade is usually based on
A. product differentiation. B. constant returns to scale. C. external scale economies. D. comparative advantage.
The sacrifices made by societies in order to engage in military spending represent:
A. the nominal costs of military spending. B. the real costs of military spending. C. the opportunity costs of military spending. D. the excessive costs of military spending.