Suppose that an increasing number of traffic collisions observed on state roads lead the governor to implement the rule that all registered vehicles must be equipped with front and side airbags. These airbags reduce the probability of serious injury in a motor vehicle collision by 62%. The new airbags the probability that a driver will be injured in a traffic collision, but also give motorists an incentive to drive more which could potentially the number of car accidents that occur on state roads.

Suppose that an increasing number of traffic collisions observed on state roads lead the governor to implement the rule that all registered vehicles must be equipped with front and side airbags. These airbags reduce the probability of serious injury in a motor vehicle collision by 62%. The new airbags the probability that a driver will be injured in a traffic collision, but also give motorists an incentive to drive more which could potentially the number of car accidents that occur on state roads.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Does the risk correspond to the dispersion, or uncertainty, impossible outcomes?
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