Bruce Copperwood's utility of wealth curve is illustrated in the above figure. Bruce is presently employed at a salary of $100,000. There is a 10 percent probability that Bruce will be totally disabled, in which case he will have no wealth
An insurance company (with no operating expenses) would be willing to offer Bruce a disability insurance policy paying $100,000 in the case of total disability for a minimum premium of A) $1,000.
B) $10,000.
C) $20,000.
D) None of the above answers is correct.
B
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The concept of a risk premium applies to a person that is
A) risk averse. B) risk neutral. C) risk loving. D) all of the above
Which of the following countries will most likely see a future increase in economic growth?
a. one where transportation, sewage and communication systems are strong b. one with high import tariffs placed on foreign-made goods. This will keep out foreign competition c. one where the average mother has 7 children d. one where it is difficult to start a new business. there are many licenses to obtain and fees to pay
Any allocation resulting from a mutually beneficial trade is efficient.
Answer the following statement true (T) or false (F)
Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. What will the market price be?
A) $10 B) $18 C) $24 D) >$24