Would You Expect an Insurance Company in the "Real World

question 32

Multiple Choice

Would you expect an insurance company in the "real world" to sell an insurance policy for exactly the "fairly-priced" level as defined in the text?

• A)Yes, because the fairly-priced insurance policy includes some profit for the insurance company.
• B)Yes, because insurance companies are required to sell their policy at the fairly-priced level by law.
• C)Probably not, because the expected value of profits for the insurance company would be zero.
• D)Probably not, because insurance companies are not in a competitive industry and are able to earn monopoly profits.