3-48 the Primary Function of Insurance Companies Is to

question 35

Multiple Choice

3-48 The primary function of insurance companies is to

• A)generate fees for the banks that sell insurance products.
• B)sell a variety of consumer investment products.
• C)protect policyholders from adverse events.
• D)assist in the transfer of wealth into the future.
• E)provide contracts that encourage policyholders to save current income.

---

Definitions:

Profit-Maximizing Monopoly

A monopoly that adjusts its output level to where marginal costs equal marginal revenues to achieve the highest possible profit.

Additional Unit

In economics, refers to the next item or unit of production, used in analyzing the costs and benefits of producing one more unit of a good or service.

Average Total Cost

The total cost of production (fixed plus variable costs) divided by the total quantity produced, representing the cost per unit of output.

Monopolist Profit

The profit earned by a monopolist, which arises from controlling the market supply of a good or service and setting prices above marginal costs.