1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
julsineya [31]
2 years ago
10

For an auto insurance company, the average cost of collision claims is $500 per year for careful drivers and $3000 per year for

poor drivers. The drivers are risk neutral and know whether they are careful or poor, but the insurance company only knows that 15% of drivers are poor. What is the insurance company's breakeven price for the collision insurance? A. $425 per year B. $450 per year C. $875 per year D. $2,625 per year
Business
1 answer:
Rainbow [258]2 years ago
8 0

Answer:

option (c) $875 per year

Explanation:

Given;

Average cost of collision claims for careful drivers = $500 per year

Average cost of collision claims for for poor drivers = $3000 per year

Poor drivers known by the company = 15%

thus,

Careful drivers = (100% - 15%) = 85%

Therefore,

Insurance company's breakeven price for the collision insurance  

= (Poor drivers known × Average cost of collision for poor drivers ) +( Careful drivers × Average cost of collision claims for careful drivers)

= 0.15 × $3000 + 0.85 × $500

= $450 + $425

= $875 per year

Hence, the correct answer is option (c) $875 per year

You might be interested in
Some schools provide free breakfast go to all students rather than to those who face food insecurity because offering to it all
snow_lady [41]

Answer:very true

Explanation:

5 0
2 years ago
What type of business sells to the end consumer
Shtirlitz [24]

Answer:

business-to- consumer (B2C)

Explanation:

Commerce is a business model which typically involves the buying and selling of goods or products at a given price.

Generally, commerce comprises of four (4) business models and these are;

1. Business to Business (B2B).

2. Consumer to Consumer (C2C).

3. Business to Government (B2G).

4. Business to Consumer (B2C).

A Business to Consumer (B2C) can be defined as a market which typically involves businesses selling their goods and services directly to the end consumers for their personal use.

Hence, the type of business that sells to the end consumer is known as business-to- consumer (B2C).

Some examples of companies that engage in the Business to Consumer (B2C) business model are; Amazon, Goo-gle, Walmart, Alibaba, Uber, LinkedIn, etc.

4 0
2 years ago
Gorton's sells Gorton's Fish Sticks, Gorton's Fish Fillets, and Gorton Grilled Fish. This is an example of
dimaraw [331]

Answer:

The correct answer is letter "A": family branding.

Explanation:

Family branding is a strategy entrepreneurs follow by naming the same or partly equal different businesses with diverse markets to take advantage of the reputation one of those businesses have obtained. The naming is legal and in most cases represents a partnership between those businesses or a license given by the main company to allow others to use part of the same name in exchange for a fee.

6 0
3 years ago
1. Of the 540 seniors at Lake City High School, 35% are going on a school trip. If the buses ordered for the trip seat 42 studen
bearhunter [10]

Answer: 1. 5 buses 2. 15%

Explanation:

7 0
3 years ago
If major earthquakes occur along active segments of the san andreas fault about every 200 years, when can another major event be
Aleonysh [2.5K]
It should generate another major event around 2050-2060
8 0
3 years ago
Other questions:
  • Andrews Corp. ended the year carrying $153,576,000 worth of inventory. Had they sold their entire inventory at their current pri
    6·1 answer
  • If you were in the dry-cleaning business, whom would you benchmark for their technological innovations? List companies in relate
    6·1 answer
  • A​ _____ is in​ top-down format and shows each level of​ design, its relationship to other​ levels, and its place in the overall
    9·1 answer
  • Net worth is the difference between your assets and your liabilities
    5·1 answer
  • Kulvekowski Company has budgeted sales of​ $30,000 with the following budgeted​ costs:
    10·1 answer
  • David contributes investment land with a basis of​ $24,000 and an FMV of​ $40,000 to a partnership for a​ 10% interest in partne
    10·1 answer
  • When is a door not a door?
    14·1 answer
  • Presented below are definitions of certain terms. Select the appropriate term from the dropdown list. Definitions 1. Quantity of
    10·1 answer
  • How has globalization made countries more independent
    14·2 answers
  • An oligopoly firm is similar to a monopolistically competitive firm in that A) both firms face the prisoner's dilemma. B) both o
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!