Best buy offers a protection plan for new smartphones

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Best Buy offers a protection plan for new smartphones at $195. The absolutely most expensive iPhone you can buy right now is $849. Assume for a moment you are a very cautious but forgetful person: you would never, ever drop or damage your phone, but you might lose it. How likely must you be to lose your phone for $195 to be an actuarially fair price for mobile phone insurance? [Hint: you're solving for p, the probability of losing your phone. Not losing your phone, therefore, happens 1-p percent of the time.]

6. If your demand for some good x is

a) is X a normal or inferior good? Show me how you know.

b) is good Y a substitute or complement for good X? Again, show me how you know.

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Reference no: EM13955757

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