An Automobile Insurance Company Is in the Process of Reviewing

question 55

Multiple Choice

An automobile insurance company is in the process of reviewing its policies. Currently drivers under the age of 25 have to pay a certain premium. The company is considering increasing the value of the premium charged to drivers under 25. According to company records, 35% of the insured drivers are under the age of 25. The company records also show that 280 of the 700 insured drivers under the age of 25 had been involved in at least one automobile accident. On the other hand, only 130 of the 1300 insured drivers 25 years or older had been involved in at least one automobile accident.
-What is the probability that an insured driver of any age will be involved in an accident?

• A)0.35
• B)0.205
• C)0.65
• D)0.983
• E)0.795

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Definitions:

Economies of Scope

Cost advantages that a business obtains due to a broader range of operations or production levels.

Horizontal Integration

A strategy where a company acquires or merges with other companies at the same stage of production in its industry, seeking to increase market share.

Market Diversification

The strategy of entering into new markets or creating new products to reduce reliance on a single market or product line.

Synergy

The combined effect of two or more individuals, entities, or factors that is greater than the sum of their separate effects.