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Suppose a company offers a standard insurance contract with a premium r of $1,000 and a payout q of 8,000. Suppose that Rock earns a
Suppose a company offers a standard insurance contract with a premium r of $1,000 and a payout q of 8,000. Suppose that Rock earns a healthy state income of $50,000, a sick state income of $20,000, and has a 10% chance of becoming ill. From this information you can determine that the expected profit for the insurance company is likely:
a. negative
b. zero
c. posi
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