Unemployment Insurance. Each worker employed by Risky Business has a 20 percent chance of losing his or her job in the next year. Each worker employed by Safe Business has a 2 percent chance of losing his or her job.

You manage an insurance company that provides a lump sum of $10,000 to each unemployed worker.

a. What is the minimum amount you would charge Risky Business for each employee covered by the unemployment policy?

b. What is the minimum amount you would charge Safe Business for each employee covered by the unemployment policy?

c. Suppose you charge the same premium to both businesses. The companies have the same number of workers and are required to purchase unemployment insurance. What is the minimum amount you would charge?