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Question
Consider the following information:The probability of a fire in a factory without a fire prevention program is 0.01. The probability of a fire in a factory with a fire protection program is 0.001. If a fire occurred, the value of the loss would be $300,000. A fire prevention program would cost $80 to run.
If the fire protection program were in place, the company could insure the warehouse for a premium equal to
A) the loss from the fire, $300,000.
B) the expected loss from the fire, $300.
C) the expected loss from the fire, $3,000.
D) the cost of the fire protection program, $80.
E) $0.
Answer
This answer is hidden. It contains 1 characters.
Related questions
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Q:
Your firm is evaluating a potential investment in new machinery, but the manager in charge of the project uses an opportunity cost of capital that is too large. How does this error affect the projected net present value of the firm's investment?
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B) NPV is understated
C) NPV is unaffected
D) NPV changes from positive to negative
Q:
For net present value calculations, the rate of return that one could earn by investing in another project with similar risk is known as the:
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Q:
If the inflation rate falls and nominal interest rates are unchanged,
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If an individual has $10,000 in a savings account paying 3% and the inflation rate is 2%, the nominal interest rate is
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Q:
The real interest rate is
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Q:
The first term in an NPV calculation is usually
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Q:
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Q:
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Suppose a labor market has perfectly inelastic supply that is composed of union and non-union workers, and both groups of workers initially earn the perfectly competitive wage. What happens to the equilibrium employment level and wage for union workers if the union exercises its bargaining power?
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Q:
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Q:
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Q:
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Q:
Scenario 14.4:
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TP = 100L - 0.125L2 MP = 100 - 0.25L
where L is the amount of labor employed. The supply curve for labor and the marginal expenditure curve for labor are given as follows:
L = PL -5 MEL = 2L + 5
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A) Marginal product of labor
B) Marginal revenue product of labor
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Q:
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Q:
Suppose the supply and demand of land for natural gas extraction are imperfectly elastic. Given that coal is a potential substitute for natural gas in energy applications, a change in the price of coal may shift the demand curve for natural gas. What happens to the economic rents assigned to land on which natural gas is extracted if the price of coal declines?
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D) We do not have enough information to answer this question.
Q:
Which of the following is NOT true about the supply of labor to the firm in a competitive labor market?
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Q:
Use the following statements to answer this question:
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Q:
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Q:
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Q:
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Q:
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B) is now maximizing profit.
C) should not use this factor of production because it has no potential in generating a profit.
D) can increase profit by expanding the employment of the factor of production.
Q:
An increase in technology that enhances labor productivity will likely result in:
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B) an increase in labor employment and an increase in the wage rate.
C) a decrease in labor employment and a decrease in the wage rate.
D) an increase in labor employment and a decrease in the wage rate.
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Q:
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Q:
If leisure is a normal good, then the income effect of a decrease in wage will
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D) increase the sum of leisure plus hours worked.
Q:
The marginal revenue product can be expressed as the
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B) increment to revenue received from one additional unit of input hired.
C) marginal physical product of an input times the average revenue received from the sale of the product.
D) average physical product of the input times the marginal revenue received from the sale of the final product.