Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Microeconomics Expert

Economics


Home >> Microeconomics

Suppose that every driver faces a 1% probability of an automobile accident every year. An accident will, on average, cost each driver $10,000. Suppose there are two types of individuals: those with $60,000 in the bank and those with $5,000 in the bank. Assume that individuals with $5,000 declare bankruptcy if they get in an accident. In bankruptcy, creditors receive only what individuals have in the bank. What is the actuarially fair price of insurance? What price are individuals with $5,000 in the bank willing to pay for the insurance? Will those with $5,000 in the bank voluntarily purchase insurance?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M947004

Have any Question?


Related Questions in Microeconomics

Assignment - read the following fictional scenarioand write

Assignment - Read the following fictional scenarioand write a report that addresses the questions shown below: The managing director of a Belgian outdoor catering company has to decide whether or not to lease new capital ...

Question as a manager one of your responsibilities is to

Question: As a manager, one of your responsibilities is to monitor recent changes in inflation. However, the recent statistics appear to be quite confusing. The CPI rose only 0.1%, but the PPI for finished goods increase ...

Question what are the economic differences during the time

Question: What are the economic differences during the time between Bush and Obama? What are the impacts of these differences on the national debt? The response must be typed, single spaced, must be in times new roman fo ...

Question imagine that you are the administrator of a city

Question: Imagine that you are the administrator of a city hospital and you have been asked by your hospital's legal counsel to prepare a presentation for your hospital's medical team that discusses negligence in the hea ...

Assignment demonstrate an understanding of the relevance of

Assignment: Demonstrate an understanding of the relevance of economic concepts within the healthcare sector. Cost and affordability are important factors in the successful delivery of healthcare to the people of this cou ...

Question suppose a country has 100 inhabitants the

Question: Suppose a country has 100 inhabitants. The population can be divided into two categories: employed and unemployed. In any given year, the transition probabilities from employed to employed is 0.95 and from unem ...

A market is supplied competitively by 50 low- cost firms

A market is supplied competitively by 50 low- cost firms, each with cost curve C(q) = 350 + 2q+ q^2, and n high-cost firms, each with cost curve C(q) = 400 + 2q +q^2. Market demand is Q = 2500 - 10*p. If none of the high ...

Question 1 assume you have two goods food and beverage with

Question: 1) Assume you have two goods: food and beverage with a monthly income of $100. The price of food (Y axis) is $20 and the price of beverage (X axis) is $10. Graph the model (i.e. set the intercept terms) and cor ...

Question use orthodox economic theory to explain the

Question: Use orthodox economic theory to explain the problem of global warming (climate change) and suggest policy solutions. What is the unique problem of such global environmental problems? What is the political econo ...

Question what are harmful manifestations of plastic

Question: What are harmful manifestations of plastic shrinkage of concrete in (a) reinforced columns and (b) slabs? Assuming that the air temperature is 21°C, the concrete temperature is 24°C, and the wind velocity is 30 ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As

Follow Us

© Copyright 2013-14 mywordsolution.com All rights reserved