The Johnsons Change Their Life Insurance Coverage Harry and Belinda Johnson spend $20 per month on life insurance in the form of a premium on a $10,000, paid-at-65 cash-value policy on Harry that his parents bought for him years ago. Belinda has a group term i-surance policy from her employer with a face amount of $200,000. By choosing a group life insurance plan from his menu of employee benefits, Harry now has $100,000 of group term life insurance. Harry and Belinda have decided that, because they have no children, they could reduce their life insurance needs by protecting one another's income for only four years, assuming the survivor would be able to fend for himself or herself after that time. They also realize that their savings fund is so low that it would have no bearing on their life insurance needs. Harry and Belinda are basing their calculations on a projected 4 percent rate of return after taxes and inflation. They also estimate the following expenses: $15,000 for final expenses, $20,000 for readjustment expenses,

and $5,000 for repayment of short-term debts.

Requirement:

(a) Should the $3,000 interest earnings from Harry's trust fund be included in his annual income for the purposes of calculating the likely dollar loss if he were to die? (See the discussions about the Johnsons in Chapter 1 beginning on page 34.) Explain your response.

(b) Based on your response to the previous question, how much more life insurance does Harry need? Use the Run the Numbers worksheet on page 366 to arrive at your answer.

(c) Repeat the calculations to arrive at the additional life insurance needed on Belinda's life.

(d) How might the Johnsons most economically meet any additional life insurance needs you have determined they may have?

e) In addition to their life insurance planning, how might the Johnsons begin to prepare for their retirement years?

OPPORTUNITY COST WORKSHEET 2 Below, you are provided Gerardo's Production Possibilities Frontier between biology homework and economics homework before and after he attends economics tutoring sessions. You will use this information to identify how a technological innovation that affects production of only one good alters the opportunity cost associated with producing both goods. PPF1 depicts Gerardo's PPF between biology homework and economics homework before he attends economics tutoring sessions. PPF2 depicts Gerardo's PPF between biology homework and economics homework after he attends economics tutoring sessions. 14 Economic Homework (in pages] 10 12 14 Minlazy Homework [in pages) Part 1: Before Gerardo attends economics tutoring sessions, what is his opportunity cost of producing an additional page of economics homework? Part 2: Before Gerardo attends economics tutoring sessions, what is his opportunity cost of producing an additional page of biology homework? * Part 3: After Gerardo attends economics tutoring sessions, what is his opportunity cost of producing an additional page of economics homework?QUESTION 8 Porter's Five Forces model is based on: O industrial organization economics. labor and demographic economics. business administration and business economics. environmental and ecological economics.Determine if the following items represent an example of positive economics or normative economics. The richest 1% of Americans should pay more taxes than the rest of the 99%. O Positive Economics O Normative Economics O A decrease in the supply of coconut will increase the price of German Normative Economics chocolate cake, a good which requires coconut shavings as a key ingredient O Positive Economics The higher the minimum wage, the higher the price of goods and services Normative Economics is likely to bo. OO Positive Economics Social welfare spending in Sweden occupies too large a portion of the O Positive Economics national budget. O Normative EconomicsWhich of the following graphs best describes the expected changes in the market for economics classes if a new law is passed that requires all undergraduate students at 4 year degree granting universities to take an economics class, while at the same time the government subsidizes the production of economics professors by supporting PhD students in economics? $ Price $ Price D1 D 0 Quantity Quantity Graph A Graph B $ Price $ Price D DJ D O Q,=0; Quantity Quantity Graph C Graph D