Refer to the Data Provided in Table 17 -Refer to Table 17

question 125

Multiple Choice

Refer to the data provided in Table 17.1 below to answer the following question(s) . The table shows the relationship between income and utility for Jane.
Table 17.1
$$\begin{array} { | r | c | } \hline \text { Income } & \text { Total Utility } \\\hline \$ 0 & 0 \\\hline \$ 20,000 & 25 \\\hline \$ 40,000 & 45 \\\hline \$ 60,000 & 60 \\\hline \$ 80,000 & 70 \\\hline\end{array}$$
-Refer to Table 17.1. Suppose Jane has a 1/3 chance of becoming disabled in any given year. If she does become disabled, she will earn $0. If Jane does not become disabled, she will earn her usual salary of $60,000. Jane has the opportunity to purchase disability insurance which will pay her her full salary in the event she becomes disabled. How much would such an insurance policy be worth to Jane?

• A) $0
• B) $20,000 or less
• C) more than $20,000 but less than $40,000
• D) $40,000 or more

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Definitions:

Full Capacity

The highest amount of products or services a business can consistently generate during a specific timeframe under standard conditions.

Fixed Assets

Long-term tangible assets used in the operation of a business, not expected to be converted to cash within a year.

Sales Growth

The increase in sales over a specific period, reflecting a company's ability to grow revenue through marketing, expansion, and new product introductions.

Subcontract

An agreement where a primary contractor hires another party to perform part of the work that they have been contracted to complete.