Mark can buy insurance, with each dollar of insurance having a cost of 0.10. If she...

Mark can buy insurance, with each dollar of insurance having a cost of 0.10. If she pays one more dollar in insurance premiums, how many more dollars of consumption will she have available in the bad state?
a) 0.11 b) 1 c) 9 d)10 e)none of the above

Expert Solution

Mark buy insurance and each dollar of insurance has insurance cost of 0.10. In other words, Insurance premium or cost is 1/10 th of insurance.
Hence, she pays one more dollar in insurance premium, she will have ten times more dollar of consumption in bad state.
Right answre is (D) or 10

Rahul Sunny answered 2 years ago

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