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Elza [17]
3 years ago
10

a lawnmower manufacturer has the following loss distribution for its annual products liability costs: loss probability 250,000 0

.05 10,000 0.15 0 0.9 what is the expected claim cost for a policy with $10,000 deductible
Business
1 answer:
Bas_tet [7]3 years ago
6 0

Answer: $12,000

Explanation:

The question makes no sense in one area. The loss probability for $0 cannot be 90% because the other two are collectively 20%. I shall therefore assume that the loss probability for $0 is 80% so that they add up to 100%.

Expected claim cost = ∑[loss probability * (Loss - Deductible)]

= 0.9 * 0 + [0.15 * (10,000 - 10,000)] + [0.05 * (250,000 - 10,000)]

= $12,000

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Effect of crowding out:

The crowding out phenomena describes the economic phenomena in which an increase in government public spending leads to reduced or perhaps may eliminate of private investment.

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The multiplier represents the ratio of income to investment change.

Given that:

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The rise in demand for goods & service will be the value of multiplier which is

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To determine the multiplier using the formula:

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When reviewing a business communication, it is best to seek feedback from Multiple select question. random strangers, asking the
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Explanation:

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