Question

oacCin aiswers is correct. Ih an insurance market there are three indistinguishable types of potential clients: of low medium and high risk. Each of these groups is composed of 1000 persons. The probability of an accident (loss) in each of these groups amounts to %, 2%, and39-respectively. If a loss occurs, the resulting damage is 100.000 zlety. The maximum amount that a client from a given group will pay for insurance is 1500 zloty, 2900 zloty, and 3500 zloty, respectively. What average (i.e. expected) maximum profit can an insurer-monopolist make offering full insurance (assume that the only cost is the paid out compensation)? a300 000 zloty b) It cannot make any profit. c) It depends on the utility functions of the insurees. d) 800 000 zloty c) 500 000 zloty

Answer 1