Why Might the Supply Curve of Insurance Policies Shift to the Right

question 5

Multiple Choice

Why might the supply curve of insurance policies shift to the right?

• A)The wealth of the sellers of insurance increases.
• B)Premiums increase.
• C)Risk aversion increases.
• D)Diversification increases.

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Definitions:

Opportunity Cost

The value of the best alternative foregone as a result of making a decision, representing the benefit that could have been gained from the next best choice.

Fixed Manufacturing Cost

This refers to the consistent expenses incurred by a company for its manufacturing operations, excluding variable costs; it includes costs like rent, salaries of permanent staff, and depreciation of factory equipment.

Variable Manufacturing Cost

Costs that vary directly with the level of production output, such as raw materials and direct labor.

Idle Capacity

The portion of a company's resources or production capacity that is not being used for production or generating revenue.