Suppose Someone Knew That the Probability of Incurring a $10,000

question 24

Multiple Choice

Suppose someone knew that the probability of incurring a $10,000 medical expense was 5% and the odds of being healthy and incurring no expenses was 95%. If they used that information to compare the expected cost to them ($500) with the $600 premium it would cost to get full coverage and decided to buy the insurance then economists would say they are

• A)Irrational.
• B)risk loving.
• C)risk averse.
• D)risk neutral.

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Definitions:

Authentic

Something genuine, not copied or false; true to one's own personality, spirit, or character.

Community

A group of people living in the same place or having a particular characteristic in common.

Argument from Analogy

A form of reasoning in which a similarity between two or more things is used to suggest that what is true of one thing must also be true of the others, especially in cases lacking direct evidence.

Other Minds

The philosophical problem concerning the nature of understanding or knowing the existence of and thoughts or feelings of others.