Continuing from the Question Above, an Additional 10 People Join

question 16

Multiple Choice

Continuing from the question above, an additional 10 people join the group who have expected medical spending of $5,000 per person on average. The new premium will be approximately

• A) $1,500
• B) $2,200
• C) $2,500
• D) $4,500

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Definitions:

Perfect Competition

A market structure characterized by many sellers and buyers, homogenous products, and no barriers to market entry or exit, leading to optimal pricing and efficiency.

Industry-wide Price

Industry-wide price refers to the general price level or average price for goods and services across a specific industry, reflecting the collective pricing trends and benchmarks.

Breaking Even

Occurs when a business's total revenues are equal to its total expenses, resulting in no profit or loss.

Perfect Competitor

An entity in a perfect competition market structure, characterized by the inability to control market prices and the production of a homogeneous product.