solve for p UTHEN Question 6 For 6-9 Given: q = $1,000 Is = $290 1x...

Question

Question

solve for p

business economics

Answer 1

Answer #1

Answer:

Given:

q = $1,000

Is = $290

Ih = $1,490

E(I) = $1,280

Expected income, E(I) = Is * probability of being sick + Ih * probability of being healthy

Of course, probability of being healthy = 1 - probability of being sick

E(I) = 1280 = 290*P + 1490*(1 - P)

1280 = 290*P + 1490 - 1490*P

(1490 - 290)*P = 1490 - 1280

1200*P = 210

So, P = 210/1200 = 0.175

P = 17.5%

Hence Correct option is 17.5%

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Answer 2

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