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ABC explosives has purchased re insurance for its factory. It can institute a re prevention program, which would cost $90, but which would lower the probability of a re from .01 to .001. The insurance company cannot determine whether ABC has instituted the program. However, it charges a deductible in the event of a re (i.e. ABC has to pay a certain amount to the insurance company if a reoccurs).
a. What problem discussed in class is the insurance company worried about in charging a deductible?
b. What is the smallest deductible that will incentivize ABC to institute the re prevention program?
The public tends to view trade deficits with alarm while macoreconomics claims that trade deficits can actually be usefull for the economy. Discuss the macroeconomists position on trade defilicts
If the local car wash changes its price for a supreme wash from $13 to $16 and the number of customers change per day from 50 to 40, what is the price elasticity of deman for this service? Is the demand for this service relatively elastic or rela..
Illustrate what happens to the supply curve and the equilibrium point when a new technology improves a production process.
Can the U.S. ever come out ahead from this quota? Why or why not? Can the ROW ever come out ahead? Why or why not?
Explain in your own words what happened with these companies which caused an international financial crisis. Identify at least one management goal for Fannie Mae and Freddie Mac.
After a two-year testing period, Pat prepared the patent application to patent the device, and then found that just a month earlier one of Pat's testing customers had patented the device. Pat demanded that the customer give up the patent to Pat, ..
Find the optimal crude oil allocation in the preceding example if the profit associated with fiber were cut in half, that is, fell to $.375 per square foot.
In your opinion, do you feel education is important in getting a better job and earning more money. Why or why not? Do you believe there are opportunity costs to furthering your education? If so, what are they? If not, why?
Studies indicate that the price elasticity of demand for cigarettes is about .4. If a pack of cigarettes currently costs $2, and the government wants to reduce smoking by 20 percent, by how much should it increase its price?
Illustrate what percentage of the CEO's total earnings is tied to profits of the firm.
Could you please explain fully the difference among an increase in demand and an increase in quantity demanded, by giving an example of what would cause an increase in quantity demanded and please illustrate the effect of such an increase with a ..
As advisors insists that this would not work, another advisor thinks it's good policy. Which advisor is correct.
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