Compute the expected fire loss in any year

Assignment Help Microeconomics

Reference no: EM132165300

Question: An engineer decided to make a careful analysis of the cost of fire insurance for his $200,000 home. From a fire rating bureau he found the following risk of fire loss in any year.

(a) Compute his expected fire loss in any year.

(b) He finds that the expected fire loss in any year is less than the $550 annual cost of fire insurance. In fact, an insurance agent explains that this is always true. Nevertheless, the engineer buys fire insurance. Explain why this is or is not a logical decision.

Reference no: EM132165300

Questions Cloud

Compute the standard deviation of the equivalent annual cost : A road between Fairbanks and Nome, Alaska, will have a most likely construction cost of $4 million per mile. Doubling this cost is considered.

Name at least two examples of this covenant in the jewish : Discuss the significance of the "special covenant" between the Jewish people and God.

What historical events took place that directly led : Contrary to a popular view, the Great Depression was not caused by the 1929 stock market crash.

Calculate the probability distribution : Over the last 10 years, the hurdle or discount rate for projects from the firm's research and development division has been 10% twice, 15% three times.

Compute the expected fire loss in any year : Compute his expected fire loss in any year. He finds that the expected fire loss in any year is less than the $550 annual cost of fire insurance.

What can you determine about the lives of middle class : From the visual and literary works what can you determine about the lives of middle class and wealthy women living during the nineteenth century?

What kinds of themes appear to be important in each work : What kinds of themes appear to be important in each work? How do these reflect the way their authors understand their respective societies?

Describe the main purpose of the hajj in the muslim faith : Describe the main purpose of the Hajj in the Muslim faith, and identify two (2) specific aspects of the Hajj that you find fascinating or significant.

Describe stylistic characteristics of baroque music genres : The Baroque era was a period of development and innovation in the field of music. Give a detailed description of three music genres that developed.

User Account

All Pages