An Insurance Company Evaluates Many Variables About a Person Before

question 8

True/False

An insurance company evaluates many variables about a person before deciding on an appropriate rate for automobile insurance. A representative from a local insurance agency selected a random sample of 100 insured drivers and recorded X, the amount of claims each made in the last 3 years. A Pareto chart can be used to present this information.

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Definitions:

Cost Formula

An equation used to predict costs, often relating total costs to the level of activity or volume of output.

Selling

The process of promoting and exchanging goods or services for money.

Administrative Expenses

Administrative Expenses are costs related to the general operations and administration of a business that are not linked directly to the manufacturing or selling of products or services.

Fixed Inspection Cost

A cost that remains constant for a specific period regardless of the level of goods produced or inspected.