-Ashton Has the Utility of Wealth Curve Shown in the Above

question 37

Multiple Choice

-Ashton has the utility of wealth curve shown in the above figure. Ashton owns a sports car worth $30,000, and that is his only wealth. Ashton is a careless driver and there is a 30 percent chance that he will have an accident within a year. If he does have an accident, his car is worthless. Suppose all sports cars owners are like Ashton. An insurance company agrees to pay each person who has an accident the full value of their car. The company's operating expenses are $1,000. What is the minimum insurance premium that the company is willing to accept?

• A) $3,000 per year
• B) $6,000 per year
• C) $10,000 per year
• D) $15,000 per year

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Definitions:

Means of Production

The physical, non-human inputs like factories, machines, and raw materials used in the process of producing goods or services.

Class Exploitation

The manipulation or unfair use of a lower social class by a higher one, often for economic gain.

Parties

In Weber’s usage, are organizations that seek to impose their will on others.

Political Groups

Organizations or collectives that seek to influence public policy, political opinion, or government decisions based on specific ideological, economic, or social beliefs.