BUEC 232 Quiz: 3.pdf
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QUESTION 1
evidence of Full insurance occurs when
a. | r > pq | |
b. | r = pq | |
c. | q = (IH - IS) | |
d. | q > (IH - IS) |
3 points
QUESTION 2
Partial and unfair insurance implies:
a. | q = (IH - IS) | |
b. | r = pq | |
c. | q > (IH - IS) | |
d. | q < (IH - IS) | |
e. | r < pq |
3 points
QUESTION 3
Full and fair insurance implies
a. | I'H = E(I) | |
b. | I'S = E(I) | |
c. | IH = E(I) | |
d. | IS = E(I) | |
e. | a and b |
3 points
QUESTION 4
Points on the straight line that connects IS and IH on the actual utility curve refer to utilities ...
1. | with full insurance | |
2. | with partial insurance | |
3. | with no insurance | |
4. | none of the above |
3 points
QUESTION 5
Which of the following is possible?
a. | utility from full and fair insurance higher than utility from full and unfair insurance | |
b. | utility from full and fair insurance lower than utility from full and unfair insurance | |
c. | utility from full and fair insurance equal to utility from full and unfair insurance | |
d. | a and c |
3 points
QUESTION 6
Which of the following is/are possible?
a. | . utility from full and fair insurance higher than utility from partial and fair insurance | |
b. | . utility from full and fair insurance less than utility from partial and fair insurance | |
c. | . utility from full and fair insurance equal to utility from partial and fair insurance | |
d. | a and |
3 points
QUESTION 7
For the insurer, which represents earnings from sick individuals?
a. | (1 - p ) x r | |
b. | p x r | |
c. | p (r - q) | |
d. | p (q - r) |
3 points
QUESTION 8
For the insurer, which represents earnings from non-sick individuals?
a. | p x q | |
b. | p x r | |
c. | (1 - p) x r | |
d. | q x (IH - IS) |
3 points
QUESTION 9
Given
p = 10%
q = $80
r = $50
calculate the expected profits of the insurance company.
a. | $22 | |
b. | $42 | |
c. | $32 | |
d. | none of the above |
3 points
QUESTION 10
The policy in the previous question can be described as
a. | fair insurance | |
b. | unfair insurance | |
c. | full insurance | |
d. | not enough information |
3 points
QUESTION 11
In addition to what is given assume IS = $800.
Assuming full insurance what is the value of IH ?
a. | $750 | |
b. | $880 | |
c. | $830 | |
d. | $872 |
3 points (Extra Credit)
QUESTION 12
Given the information in the last 3 problems, solve for E(I):
a. | $792 | |
b. | $872 | |
c. | $842 | |
d. | none |