Burger Prince Restaurant Is Considering the Purchase of a $100,000

question 7

Essay

Burger Prince Restaurant is considering the purchase of a $100,000 fire insurance policy.The fire statistics indicate that in a given year the probability of property damage in a fire is as follows:
$$\begin{array} { l c c c c c c } \text { Fire Damage } & \$ 100,000 & \$ 75,000 & \$ 50,000 & \$ 25,000 & \$ 10,000 & \$ 0 \\\hline \text { Probability } & .006 & .002 & .004 & .003 & .005 & .980\end{array}$$
a.If Burger Prince was risk neutral,how much would they be willing to pay for fire insurance?
b.If Burger Prince has the utility values given below,approximately how much would they be willing to pay for fire insurance?
$$\begin{array} { l c c c c c c c } \text { Loss } & \$ 100,000 & \$ 75,000 & \$ 50,000 & \$ 25,000 & \$ 10,000 & \$ 5,000 & \$ 0 \\\hline \text { Utility } & 0 & 30 & 60 & 85 & 95 & 99 & 100\end{array}$$

Identify the situations where nonparametric tests are preferred over parametric tests.

Apply the Kruskal-Wallis test to determine differences among more than two groups.

Distinguish between tests for matched pairs and tests for independent samples.

Understand the concept of nonparametric tests for ordinal or interval data not assuming normal distribution.

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Definitions:

Efficiency

The ability to achieve maximum productivity with minimum wasted effort or expense, often a key goal in business operations and economic theory.

Equity

The concept of fairness or justice in the way people are treated, or the value of shares owned in a company.

Voice

In the context of labor relations, voice refers to the ability of workers to express their opinions, grievances, or suggestions, typically through a union or other representative body.

Human Resource Management

The strategic approach to managing people in an organization, focusing on policies and systems to maximize employee performance and achieve organizational goals.