Reinsurance is a common solution for insurance companies when the
A. uncertainty to homeowners and insurance companies is large.
B. uncertainty cannot be summarized actuarially.
C. uncertainty to homeowners is large but small for insurance companies.
D. uncertainty to homeowners and insurance companies is small.
Answer: A
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The vertical distance between the total cost curve and the total variable cost curve reflects
a. profit per unit. b. total fixed cost. c. marginal cost. d. the principle of diminishing marginal returns.
When a positive externality exists,
A. external benefits are necessarily greater than private benefits. B. social benefits are greater than private benefits. C. social benefits are less than private benefits. D. social benefits equal private benefits. E. none of the above
All of the following are advantages of organizing a business as a sole proprietorship EXCEPT
A) ease of formation. B) limited liability. C) ease of decision-making. D) single taxation.
When Williams-Sonoma introduced its first bread baker at $200, sales were low. But when it decided to offer a fancier $300 version, sales of the $200 bread baker rose tremendously. An economist concluded that consumers needed another bread baker for comparison to decide whether the $200 bread baker was a deal. This economist is likely to be a(n):
A. behavioral economist. B. traditional economist. C. engineering economist. D. irrational economist.