The Income Method of Determining How Much Life Insurance Coverage

question 73

Multiple Choice

The income method of determining how much life insurance coverage you need is

• A)based on future family expenses.
• B)based on the age of your children.
• C)based on the amount of your 401(k).
• D)a good starting point.

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Definitions:

Economic Resources

Assets or inputs that contribute to the production of economic goods, including land, labor, capital, and entrepreneurship.

Economic Profits

Profits calculated by subtracting both explicit and implicit costs from total revenue, capturing the true economic value created.

Opportunity Costs

A concept in economics that describes the potential benefits that an individual, investor, or business misses out on when choosing one alternative over another.

ATC

Average Total Cost is the sum of all production costs divided by the quantity of output produced.