In General,people Are Willing to Pay More Than the Expected

question 120

Multiple Choice

In general,people are willing to pay more than the expected value of insurance because:

• A)they are risk-averse enough to want protection against very large expenses.
• B)the extra amount represents the value of having peace of mind about such occurrences happening.
• C)there is utility gained from having the confidence that,if faced with enormous expenses as a result of risk,they will not lose their home or go bankrupt.
• D)All of these statements are true.

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Definitions:

Direct Labor Hours

The total time workers spend producing a product or service, directly associated with its manufacture.

Plantwide Overhead Rate

A single overhead absorption rate used throughout a manufacturing plant for allocating overhead costs to products.

Machine Hours

A measure of the amount of time a machine is operated in the production of goods.

Allocation Base

A criterion or standard used to distribute overhead costs among various products, services, or departments within a business.