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Hi, could you help me with this question please. just the answer is fine. no working out needed Question 1 5 pts Insuragard sells insurance
Hi, could you help me with this question please. just the answer is fine. no working out needed
Question 1 5 pts Insuragard sells insurance policies that completely compensate drivers in the event of an accident. The cost of compensating a driver is $10,000, while the risk of an accident varies from driver to driver. Suppose that there are four drivers in the market for car insurance: - Doug has a 10% chance of having a car accident, and is willing to pay $1500 for an insurance policy. - Sarah has a 15% chance of having a car accident, and is willing to pay $2250 for an insurance policy. - Graham has a 20% chance of having a car accident, and is willing to pay $3000 for an insurance policy. - Audrey has a 25% chance of having a car accident, and is willing to pay $3750 for an insurance policy. Each driver knows her/his own risk of having an accident, because each driver knows how carefully she/he drives. However, this information is hidden from Insuragard (lnsuragard does know the distribution of risk in the market). Hint: Before proceeding, calculate the expected payout to each individual. Use the information provided to answer the following questions: i. If Doug, Sarah, Graham and Audrey all purchase a policy, the fair price is [ Select 1 . ii. If Sarah, Graham and Audrey all purchase a policy, the fair price is [59'9\"] V . iii. If Graham and Audrey both purchase a policy, the fair price is [SEIECt] V . iv. If only Audrey purchases a policy, the fair price is [ 59'9\"] V . v. If lnsuragard will not sell policies for less than the fair price, the maximum number of drivers who can be covered by a policy is [ Select] VStep by Step Solution
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