-Steve Owns a Motorcycle Valued at $5,000, and That Is

question 41

Multiple Choice

-Steve owns a motorcycle valued at $5,000, and that is his only asset. There is a 5 percent chance that Steve will have an accident within a year. If he does have an accident, his motorcycle is worthless. Steve's utility of wealth curve is shown in the figure above. An insurance company agrees to pay Steve the full value of his motorcycle in case of an accident if he buys the company's insurance policy. The company's operating expenses are $500 per policy. With no insurance, Steve's expected wealth is

• A) $4,000.
• B) $4,500.
• C) $3,500.
• D) $5,000.

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Definitions:

Dominance

An attribute of an allele that masks the effect of a recessive allele paired with it in the phenotype of the organism.

Sexual Behavior

Actions related to how organisms reproduce, often influenced by biological, psychological, and social factors.

Inclusive Fitness

The total of an individual’s direct and indirect fitness; includes the genes contributed directly to offspring and those contributed indirectly by kin selection. Compare with direct fitness. See kin selection.

Sociobiology

The branch of biology that focuses on the evolution of social behavior through natural selection.