-Ashton Has the Utility of Wealth Curve Shown in the Above

question 37

Multiple Choice

-Ashton has the utility of wealth curve shown in the above figure. Ashton owns a sports car worth $30,000, and that is his only wealth. Ashton is a careless driver and there is a 30 percent chance that he will have an accident within a year. If he does have an accident, his car is worthless. Suppose all sports cars owners are like Ashton. An insurance company agrees to pay each person who has an accident the full value of their car. The company's operating expenses are $1,000. What is the minimum insurance premium that the company is willing to accept?

• A) $3,000 per year
• B) $6,000 per year
• C) $10,000 per year
• D) $15,000 per year

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Definitions:

Prevent Bias

Strategies or practices aimed at identifying and eliminating personal, cultural, and structural prejudices that can affect decision-making and outcomes.

Larger Sample

Refers to a more substantial portion or quantity of items or individuals selected from a population, used in research to increase the representativeness and accuracy of results.

Generalizable

The quality of research findings being applicable to larger groups or situations beyond the specific contexts in which the research was conducted.

Research Design

Research design is the framework or strategy for a study that guides the collection and analysis of data to address specific research questions.