Jaleh Has Just Landed a Great Job and Plans to Buy

question 162

Essay

Jaleh has just landed a great job and plans to buy a fancy car worth $100,000.Jaleh is
risk-averse, but she likes to drive fast, so the probability that she wrecks and totals the car (a total loss of $100,000) is 0.1.The probability that she has no accidents is 0.9.If an insurance company were to offer Jaleh a fair insurance policy that completely replaced her car, how much would she pay? What is the most she would pay for an insurance policy that would completely replace her car if she totaled it?

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Definitions:

Complete Remission Rate

The percentage of patients whose disease is completely eliminated or reaches an undetectable level due to treatment.

Developed Countries

Nations with a high level of industrialization, a high standard of living, and a high Human Development Index (HDI).

Sociocultural

Relating to the interactive influence of social and cultural factors on an individual's behavior and functioning.

Expressed Emotion

A measure of the family environment that is based on how much criticism, hostility, and emotional over-involvement are expressed towards a family member.