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QUESTION
If the probability of the insurable event is 0.25, and the insurer's loading costs are 15% of thepolicy value, then in a competitive insurance
- If the probability of the insurable event is 0.25, and the insurer's loading costs are 15% of thepolicy value, then in a competitive insurance market, what will each dollar of insurance cost?
- Suppose, if ill, that Fred's demand for health services is summarized by the demand curve Q= 75 - 3P, where P is the price of services. How many services does he buy at a price of $20?Suppose that Fred's probability of illness is 0.30. What is the actuarially fair price of health insurance for Fred with a zero-coinsurance rate? if the insurance company pays Fred's entire loss, what will Fred's expenses be? How much will the company pay? Will it continue tooffer him insurance at the actuarially fair rate? Why?
