Fire insurance. An insurance company looks at the records for millions of

homeowners and sees that the mean loss from fire in a year is

per

person. (Most of us have no loss, but a few lose their homes. The $300 is the

average loss.) The company plans to sell fire insurance for $300 plus enough to

cover its costs and profit. Explain clearly why it would be a bad business

decision to sell only 5 policies. Then explain why selling thousands of such

policies is a safe business.