Examine the table above . The insurance company does not know the probabilities of falling sick for each individual. ( a ) If the company charged everybody a premium of Tk.2,000 , who would stay and who would leave the insurance market ? Say why. (All the questions are the same part of one single question. Please answer them all.) ( b ) If the company charged everybody a premium equal to the average of the actuarially fair premiums for all , who would stay and who would leave ? Say why.

Holt Mcdougal Larson Pre-algebra: Student Edition 2012
1st Edition
ISBN:9780547587776
Author:HOLT MCDOUGAL
Publisher:HOLT MCDOUGAL
Chapter7: Percents
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Examine the table above . The insurance company does not know the probabilities of falling sick for each individual. ( a ) If the company charged everybody a premium of Tk.2,000 , who would stay and who would leave the insurance market ? Say why. (All the questions are the same part of one single question. Please answer them all.) ( b ) If the company charged everybody a premium equal to the average of the actuarially fair premiums for all , who would stay and who would leave ? Say why.
Insurance
Prob. of
Lost income
Buyer
falling sick
if sick (Tk.)
A
0.20
15,000
В
0.15
20,000
C
0.10
25,000
D
0.05
30,000
E
0.05
20,000
F
0.15
10,000
Transcribed Image Text:Insurance Prob. of Lost income Buyer falling sick if sick (Tk.) A 0.20 15,000 В 0.15 20,000 C 0.10 25,000 D 0.05 30,000 E 0.05 20,000 F 0.15 10,000
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