Distinguish between fixed and variable costs

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Question 1. Why is it important to distinguish between fixed and variable costs?

Question 2. Your firm, which operates a nationwide system of cancer clinics, has annual profits of $800 million and cash reserves of $500 million. Your clinics have a replacement value of $200 million, and fire insurance for them would cost $5 million per year. Actuarial data show that your expected losses due to fire are $4 million. Should you buy insurance?

Question 3. Your house is worth $200,000. Your risk of a catastrophic flood is 0.5 percent. Such a flood would destroy your house and would not be covered by homeowner's insurance. Although you grumble, you buy flood coverage for $1,200. Are you risk averse or risk seeking?

Question 4. Kim and Pat underwrite insurance. Each underwrites 50 accounts per month. Each account takes four hours to und

Reference no: EM132450750

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