The Enterprising Editor of a Daily Newspaper Has Decided to Run

question 9

Essay

The enterprising editor of a daily newspaper has decided to run a legal column in which local lawyers respond to questions mailed in by readers. One reader submitted the following question:
"I'm thinking of buying a resort on Dog Island. There is no bridge to the island, but regular ferry service is provided. Ninety percent of the resort customers get to the island by ferry. If that ferry ever sank, I would be sunk! Can I insure the ferry? If I can, how much would I be able to insure it for? Would I be able to collect enough to set up my own ferry? If not, what should I do?"
If you were the lawyer responding to this question what issues would you raise?

---

Definitions:

Horizontal

A line or direction parallel to the ground or to the bottom edge of a page, representing equality or uniformity in a graphical representation.

Market Price

The current price at which an asset or service can be bought or sold.

Average Variable Cost

The variable cost of production divided by the quantity of output, representing the cost of labor and materials per unit of production.

Economic Profit

The difference between the total revenue generated by a business and the total costs, both explicit and implicit.