An insurance company has found that the severity of property damage ina fire is positively related to

Question:

An insurance company has found that the severity of property damage ina fire is positively related to the number of firefighters arriving at the scene.

a. Draw a diagram that depicts this finding with number of firefighters on the horizontal axis and amount of property damage on the vertical axis. What is the argument made by this diagram? Suppose you reverse what is measured on the two axes. What is the argument made then?

b. Should the insurance company ask the city to send fewer firefighters to any fire in order to reduce its payouts to policy holders?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Economics

ISBN: 9781319181949

5th Edition

Authors: Paul Krugman, Robin Wells

Question Posted: