Suppose an Insurance Company Has Estimated That 20 Percent of All

Multiple Choice

Suppose an insurance company has estimated that 20 percent of all of its potential policy owners are high- cost and sets a price for their insurance policy with the understanding that 20 percent of its policy owners will be high- cost. If the true percentage of high- cost potential policy owners is 40 percent, the insurance company has set its price too ________ and will have_______ high- cost policy owners than expected.

A) high; less
B) low; more
C) low; less
D) high; more