Continuing with the same family from the preceding question, suppose a risk neutral insurance company exists to provide vacation insurance. Suppose further that each vacation day requires a constant expenditure, and this expenditure is standard across everybody. This allows us to simplify the problem by considering all payments to be in terms of vacation days. What is the least the insurance
company would charge (in terms of vacation days)?
a. 1
b. 2
c. 3
d. 4
b
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Last year Christine worked as a consultant. She hired an administrative assistant for $15,000 per year and rented office space (utilities included) for $3,000 per month. Her total revenue for the year was $100,000. If Christine hadn't worked as a consultant, she would have worked at a real estate firm earning $40,000 a year. Christine's opportunity cost of working as a consultant last year was ________.
A. $15,000 B. $51,000 C. $36,000 D. $40,000
When a government fines and/or imprisons persons convicted of using illegal drugs, the government is attempting to decrease the illegal drug trade by shifting the ________ curve for illegal drugs ________
A) demand; rightward B) demand; leftward C) supply; rightward D) supply; leftward
Every six weeks, the Federal Open Market Committee (FOMC) meets to discuss how to best adjust ________ to accommodate shocks that shift the level of ________
A) the equilibrium real interest rate; the target Fed Funds rate B) the target Fed Funds rate; the equilibrium real interest rate C) the 3 month T-bill rate; the inflation gap D) target rate of inflation; money demand E) none of the above
“Common stock” is the type only sold to small investors.
Answer the following statement true (T) or false (F)