Exhibit 12.5 The Following Questions Use the Information Below

question 40

Multiple Choice

Exhibit 12.5
The following questions use the information below.
The owner of Sal's Italian Restaurant wants to study the growth of his business using simulation. He is interested in simulating the number of customers and the amount ordered by customers each month. He currently serves 1000 customers per month and feels this can vary uniformly between a decrease of as much as 5% and an increase of up to 9%. The bill for each customer is a normally distributed random variable with a mean of $20 and a standard deviation of $5. The average order has been increasing steadily over the years and the owner expects the mean order will increase by 2% per month. You have created the following spreadsheet to simulate the problem.
-If the arrival process is modeled as a Poisson random variable with arrival rate λ, then the average time between arrivals is

• A) 1/μ
• B) 1/λ
• C) 1/λ²
• D) σ

Understand concepts of insurable interest and its impact on various parties in a transaction.

Analyze court rulings related to insurable interest and risk of loss.

Distinguish between different types of contracts and their implications on risk of loss and delivery obligations.

Interpret how risk of loss is determined and managed in sales transactions.

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Definitions:

Human Capital

Is the sum of useful skills and knowledge that an individual possesses.

Business Administration

The management and operational skills required to run a business effectively, including planning, organizing, staffing, leading, and controlling organizational resources.

Income Level

A measure of the amount of monetary earnings or revenue a person, family, or household receives within a specified time period, often used to gauge economic status.

Welfare State

A government system that provides a range of social security and welfare benefits to its citizens.