The Limits of Liability on an Insurance Policy Are $1,000,000

question 3

Multiple Choice

The limits of liability on an insurance policy are $1,000,000 for each claim, $4,000,000 aggregate. A nurse is charged in a serious situation in which five separate lawsuits have been filed. What is the most the insurance company will likely pay in this situation?

• A) $4,000,000
• B) $200,000
• C) $1,000,000
• D) $5,000,000

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Definitions:

Marginal Cost

The cost added by producing one more item of a product, a crucial factor in economic decision-making regarding production levels.

Economic Profit

The difference between a firm’s total revenues and its total costs, including both explicit and implicit costs, representing the actual financial gain.

Accounting Profit

The total revenue of a business minus its explicit costs, reflecting the financial gain as recorded in the financial statements.

Perfectly Competitive

A market structure characterized by a large number of small firms, a homogeneous product, perfect information, and free entry and exit.