TABLE 2-2 An Insurance Company Evaluates Many Numerical Variables About a Person

question 184

Multiple Choice

TABLE 2-2
An insurance company evaluates many numerical 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 insured drivers and recorded, X, the number of claims each made in the last 3 years, with the following results.

-Referring to Table 2-2, how many total claims are represented in the sample?

• A) 15
• B) 50
• C) 111
• D) 250

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Definitions:

Expected Utility

A theory in economics that calculates the anticipated utility resulting from different outcomes in risky or uncertain situations.

Utility

(Of a consumer) a measure of the satisfaction derived from consumption of goods and services.

Probability

The measurement of the likelihood of a specific event or outcome occurring.

Insurance Premium

The amount of money that an individual or business must pay for an insurance policy.