Multiple Choice
A risk-averse individual who owns a $200,000 house and faces the prospect that the house will burn down with the probability 0.05 in any given year will be willing to pay how much of an annual premium to fully insure against such a loss?
A) $5,000
B) More than $10,000
C) No more than $5,000
D) Either more or less than $10,000 depending on whether housing is a normal or inferior good for the individual
Correct Answer:
Verified
Correct Answer:
Verified
Q27: Which of the following statements is true?<br>A)Consumers
Q28: In an attempt to encourage the use
Q29: Suppose Microsoft stock will provide either a
Q30: Use the following figure to answer the
Q31: Assume an indifference map with other goods
Q33: For a risk-loving individual,with return on the
Q34: In which of the following cases can
Q35: When comparing T-bills and stocks,a risk-averse investor
Q36: Use the following figure to answer the
Q37: A subsidy can actually cause the consumption