Whitewater Rapids Provides Canoes to Tourists Eager to Ride Whitewater

question 78

Multiple Choice

Whitewater Rapids provides canoes to tourists eager to ride Whitewater river's rapids.Management has determined that there is one chance in a thousand of a customer being injured or killed.Settlement of resulting lawsuits has an average cost of $650,000.Insurance with a $50,000 deductible is available.It covers the costs of lawsuits,unless there is evidence of criminal negligence.Based on cost-benefit analysis,what is the most that the business should pay for the insurance?

• A) $50
• B) $500
• C) $600
• D) $650

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Definitions:

Skimming Pricing Strategy

A pricing approach where a product is initially set at a high price before gradually lowering it over time to capture different segments of the market.

R&D Costs

Expenses related to the research and development activities of a company, aimed at the innovation, improvement, or development of new products or services.

Competitive Entrants

New participants in a market who compete against established incumbents, usually introducing new competition or innovation.

Skimming Pricing

A pricing strategy involving setting high prices initially and then gradually lowering them to make the product available to a broader market.