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Discuss the Building Blocks of an Insurance Premium

question 38

Essay

Discuss the building blocks of an insurance premium.


Definitions:

Marginal Revenue Product

Additional income derived from the employment of an extra production factor.

Diminishing Marginal Returns

A principle stating that if one factor of production is increased while others remain constant, the overall returns will eventually decrease after a certain point.

Marginal Revenue Product

The additional income generated from using one more unit of a resource or factor of production.

Marginal Product

The additional output that results from using one more unit of a factor, keeping other factors constant.

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