Assume that a single insurance plan applies to 2,000 low-risk people and 1,000 high-risk people opting for insurance coverage. If the average claim submitted by low-risk people is $100 while that submitted by high-risk people was $1,000 . the insurer would break even by setting a premium of:
a. $250.
b. $400.
c. $200.
d. $500.
B
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Suppose that nominal GDP in 2016 was less than real GDP in 2016. Given this information, we know for certain that
A) real GDP in 2016 was greater than real GDP in the base year. B) the price level in 2016 was less than the price level in the base year. C) real GDP in 2016 was less than real GDP in the base year. D) the price level in 2016 was greater than the price level in the base year.
Mary receives a consumer surplus of $500 from purchasing a purse. If the market price of the purse is $1,500, the price Mary is willing to pay is $1,600
a. True b. False Indicate whether the statement is true or false
Suppose someone knew that the probability of incurring a $10,000 medical expense was 5%, and the odds of being healthy and incurring no expenses was 95%. If they used that information to compare the expected cost to them ($500) with the $500 premium it would cost to get full coverage and decided to buy the insurance, but only if the price went no higher then economists would say, they are
A. risk-neutral. B. risk-loving. C. risk-averse. D. irrational.
Each member of OPEC can increase its income by selling more oil than its output quota because
A) the demand for oil is perfectly elastic. B) by selling more at OPEC's cartel price, a member will automatically earn more income. C) each member's demand is more elastic than the total demand for oil. D) the demand for oil is inelastic so total revenue increases.