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If There Are 1,000 People, Each of Whom Owns a $100,000

question 89

Essay

If there are 1,000 people, each of whom owns a $100,000 house, and they each stand a
1/1,000 chance each year of suffering a fire that will totally destroy their house, what is the minimum that they would have to pay annually for fire insurance?


Definitions:

Long-Term Memory

A type of memory responsible for the storage of information over an extended period, ranging from days to decades.

Memory Consolidation

The method through which memories from the short-term are converted into long-term storage.

Long-Term Storage

Describes the phase of memory in which information is retained for extended periods of time, ranging from minutes to a lifetime.

Hippocampus

A major component of the brain of humans and other vertebrates, playing critical roles in the consolidation of information from short-term memory to long-term memory and spatial navigation.

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