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Question: ABC Explosives has purchased fire nsurance for its factory. It can institute a fire prevention program, which would cost $90, but which would lower the probability of a fire from 0.01 to company cannot determine whether ABC has instituted the program. However, t charges a deductible in the event of a fire (i.e. ABC has to pay a certain amount to the insurance company if a fire occurs). What is the smallest deductible that will encourage ABC to institute the fire prevention program?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M93137699

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