V4

1. 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) zero b) negative c) positive