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How Much Insurance Would Be Needed in Order to Provide

question 80

Essay

How much insurance would be needed in order to provide for a family for 20 years if the pretax income necessary to cover living expenses is $50,000 and the money can be invested at 6 percent?
(a)$573,500
(b)$1,000,000
(c)$833,333
(d)$2,100,000


Definitions:

Price Elasticity

A tool for measuring how changes in price impact the demand for a particular item.

Excise Tax

Excise Tax is a specific tax levied on particular goods, services, or transactions, often included in the price of products like gasoline, tobacco, and alcohol.

Income Elasticity

A gauge of the extent to which the consumption of a good or service is affected by alterations in the income levels of consumers.

Inferior Good

A type of good for which demand decreases when consumer income rises, contrary to normal goods where demand increases with rising income.

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