Scenario 17.3 Consider the Following Information

question 87

Multiple Choice

Scenario 17.3
Consider the following information:
The probability of a fire in a factory without a fire prevention program is 0.01. The probability of a fire in a factory with a fire protection program is 0.001. If a fire occurred, the value of the loss would be $300,000. A fire prevention program would cost $80 to run.
-Refer to Scenario 17.3. If the fire protection program were in place, the company could insure the warehouse for a premium equal to:

• A) the loss from the fire, $300,000.
• B) the expected loss from the fire, $300.
• C) the expected loss from the fire, $3,000.
• D) the cost of the fire protection program, $80.
• E) $0.

---

Definitions:

Internal Integration

A shared identity with agreed-upon methods of working together.

Organizational Survival

Refers to the ways in which a company maintains its existence and sustains its operations over time in a competitive marketplace.

External Adaptation

The process by which an organization or group adjusts and responds to changes and challenges in its external environment.

Competition

The rivalry between entities to achieve superiority in a specific area, often leading to innovation and improvement.