Why does the assumption of independence of risks matter

Assignment Help Microeconomics
Reference no: EM13190305

1. Why does the assumption of independence of risks matter in the examples of insurance? What would happen to premiums if the probabilities of houses burning were positively correlated? Can you think of a situation where they might be negatively correlated?

2. Small firms can discover the abilities of their workers more quickly than large ones because they can observe the workers more closely at a variety of tasks. Does it then make sense for people with high abilities to go to small firms? Give some reasons why and some reasons why not?

Reference no: EM13190305

Questions Cloud

Find out the empirical formula of a compound : Determine the empirical formula of a compound that is 32.79% Na,12.90% Al with the remainder F.If the molecular mass is approximately 200 amu
Why should you ever put yourself in a position : A friend convinces you that she has a great idea for a business, and the two of you incorporate. You supply her with funds and let her make all of the executive decisions. Under the agreement you hold 30% of the firms stock and your friend holds 7..
Define model the packing of atoms : Briefly comment on whether or not this experiment shows that you can successfully model the packing of atoms in a liquid by randomly packing
How do innate and environmental factors interact : How do innate and environmental factors interact? Please be sure to provide at least 2 examples. What relationship exist between one period of life and development in another period? Please be sure to provide at least 2 examples.
Why does the assumption of independence of risks matter : Small firms can discover the abilities of their workers more quickly than large ones because they can observe the workers more closely at a variety of tasks. Does it then make sense for people with high abilities to go to small firms
State compund z has a solubility limit : Compound Z has a solubility limit of 32.5 g/L in diethyl ether. Compund Z has a solubility limit od 2.5 g/L in water. You are given a 100 mL aqueous solution that contains 200 mL of compund Z. If you do three 33.3 mL extractions of Z using diethyl..
Conversational quality : "Conversational quality" in a speech means that the speaker talks the same as she or he would in ordinary conversation.
What type of analysis in an actual business situation : a competing firm are the only sellers of a new product. You are engaged in an intense battle for initial market share. You both realize that the one who captures most of the market share will be the one who spends the most on advertising and promo..
Explain butanol is mixed with an equal volume : What observed rotation is expected when a 1.06 M solution of (R)-2-butanol is mixed with an equal volume of a 0.530 M solution of racemic 2-butanol,

Reviews

Write a Review

Microeconomics Questions & Answers

  Revenue source for health care organizations

Governmental sources (public programs) and private payers are just a few examples regarding sources of health care revenue. Medicare, Medicaid, and managed-care programs are some types of payers that make up the revenue source for health care orga..

  Determination of the appropriate amount of undeveloped land

Analyse the determination of the appropriate amount of undeveloped land along this river as an externality and public goods problem

  What is the reaction function of oligopolist

The equation QA= 1/2(12-Q)b) is the so called reation function of duopolist A in a COurnot model becasue given the value of Qb, Qa gives the best or profit-maximizing level of sales of oligopolist A. Show that this is the case with reference. Wha..

  Research bubble and outline the basics of extraordinary time

Individual investors lost millions and the NASDAQ (the stock exchange for most Internet companies) came tumbling down. What happened? Why did it happen? What could have been done to stop this unsafe surge in valuation?

  Computing equilibrium price-consumer surplus

In the competitive market, the market demand is Qd=48 - 5p and the market supply is Qs = 7P. The equilibrium price is4

  Explain how the problems are interconnected.

Among the problems that hinder growth in developing economies are poor infrastructure, lack of financial institutions and a sound money supply, a low saving rate, poor capital base, and lack of foreign exchange. Explain how these problems are inte..

  Find actual value of the irr on the incremental cost

You cat's summer kitty-cottage needs a new roof. You are considering the following two proposals and feel a 15-year analysis period is in line with your cat' remaining lives. (There is no salvage value for old roofs.)

  Explain benefit-cost ratio on incremetal investment

The government is considering undertaking one of the four projects A1, A2, A3, A4. These projects are mutually exclusive, and the estimated present values of their costs and of their benefits are shown in millions of dollars as follows.

  How an account makes an annual rate

A family decides to save for the college education of their kindegradener starting with her 6th birthday. They would ilike to have $40,000.00 at her 19th birthday.

  Computing marginal costs with excel

Using the given table, find out the quantity where MC = ATC. Find out the quantity where ATC is at its minimum. Find out the quantity that is the most efficient operating point for the firm.

  Describing laws of demand and supply

Describe the law of demand. Why does a demand curve slope downward? What are the determinants of demand? What happens to the demand curve when each of these determinants changes?

  Explain long run equilibrium and inflation rate

Suppose the annual inflation rate is at 2% and 8.5% of the labor force is currently unemployed. If you were on the Fed's Open Market Committee, what action would you prescribe? How would this affect the economy, the inflation rate, and the unemplo..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd