Suppose Ordinarily Half Your Class Would Get an a and Half

question 8

Essay

Suppose ordinarily half your class would get an A and half would get a B, with A students having a 25% chance of getting an A and B students having a 25% of getting an A.It costs $100 to persuade the instructor to raise a B grade to an A.A student is willing to pay $40 to insure she will get her usual grade and $70 to insure she will get a higher grade than usual.
a.If all students buy insurance that guarantees them an A, what is the zero profit price for an insurance company that offers A insurance.
b.Will grade insurance be sold in equilibrium?
c.Who would buy insurance and at what price if the insurance companies could tell what type of student each student is?
d.Is either the result in (b) or (c) efficient?

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Definitions:

Best Practice

Techniques or methodologies that, through experience and research, have reliably led to desired or optimum outcomes.

Special Needs

A term for individuals who require additional or specific support due to physical, developmental, or emotional disabilities or challenges.

Integration

The process of combining parts or elements to form a whole, often used in the context of systems or social inclusion.

Shock Phase

A critical stage in the body's response to severe stress, injury, or illness characterized by reduced blood flow and oxygen to tissues.