The frequency of breakdown of a machine per month is shown in the table. The cost ofa breakdown is $1,000 and the cost of preventive maintenance is $1,250 per month. Ifpreventive maintenance is performed, the probability of a machine breakdown is negligible. Should the manager use preventive maintenance, or would it be cheaper to repair themachine when it breaks down?Number of breakdowns 0 1 2 3Frequency of occurrence .20 .30 .40 .10

Q: One investment option will give a guaranteed income of $100,000. An alternative option is risky -…

A: Risk-averse: - it is a strategy or the nature of the person of avoiding risk involved in capital…

Q: An oil company is considering drilling in the Gulf at a current cost of $400,000 with an expected…

A: Given information, Current cost to the firm: $400,000 Expected profit in 3 years: $500,000 Interest…

Q: 1. (a) Explain the difference between adverse selection and moral hazard. (b) How can adverse…

A: Economics is a branch of social science that describes and analyzes the behaviours and decisions…

Q: ABC Corporation resells one type of candle. It has 250 working days. Each day, it sells an average…

A: “Since you have posted a question with multiple sub-parts, we will provide the solution only to the…

Q: A building worth $100,000 is insured for $60,000 under a policy with an 80% co-insurance clause.…

A: Insurance is defined as the reimbursement of losses. It is provided by an insurance company where…

Q: Find EMV and recommend the course of action Find the EMV under certainty Use the EVC to find the…

A: Expected Monetary Value (EMV) is the expected value of an investment alternative for its given…

Q: The graph shows a relationship between two variables, x and y. What is the slope of the…

A: The relationship between variables describes how changes in one variable are associated with changes…

Q: .True or False? The FAR is a chapter within Title 48 of the Code of Federal Regulations…

A: The regulation being used by all executive agencies in the acquisition of services and supplies with…

Q: Uncertainty  The Utility function is U = W1/3 Flood occurs with Probabilities=1/25. The Value of a…

A: Expected utility is a weighted average of utilities  of each of the possible events.

Q: 2. Alice maximizes expected utility with an index u(x) √x where x is the total annual income. Her…

A: In certainty equivalence the preference of the consumer is an assured amount rather a higher return…

Q: PLS HELP ASAP ON BOTH

A: The gas that can be generated away from the arc by the action of arc radiation on the surrounding…

Q: Use the figure shown to answer the questions below Uz U3 U, 24 32 45 72 Income Currently the…

A: Given information Income=72 When accident income=24 Probability of accident=0.5625

Q: 20-1 Your product fail about 2% of the time, on average. Some customers purchase the extended…

A: Adverse selection occurs when there's a lack of symmetric information before a deal between a buyer…

Q: 10.1. SafetyNet TM. SafetyNetTM was a simple insurance plan de- signed to help people if they lost…

A: Insurance is a tool that enables the risk transfer from the insured (who is taking the policy) to…

Q: A lottery system has balls numbered 1 to 65 and randomly selects 6 of the lottery balls. There is…

A: balls numbered 1 to 65 randomly selects 6 of the lottery balls one prize of $ 10,000,000.00

Q: None

A: Components of the Decision Tree:Decision A:This is the starting point of the decision tree, where a…

Q: Pls help ASAP

A: For the first question, option C) is correct because some home insurance policies do offer coverage…

Q: A building worth $100,000 is insured for $60,000 under a policy with an 80% co-insurance clause.…

A: A co-insurance clause is a provision in an insurance policy that needs the insured party to maintain…

Q: ing worth $120,000 is insured for $60,000 under a fire policy with an 80% co-insurance clause. Fire…

A: The insurance company will pay the lesser of the two amounts: the actual cash value of the building…

Q: 12. Over the last decade, robotic-drone a research and development company has researched in new…

A: Given information $90M sales annually with 20% probability. $76M sales annually with 45%…

Q: Give a few examples of risk.

A: We know that- Risk includes uncertainty about the effects or implications of an activity with…

Q: 10 00- RBO 109 4 0 M 200 ODO 0.0 036 16:24 EIN 400 414 110 IMIT 1 2 200 5.30 4.00 4.01 01/9 1 1600 3…

A: Market demand for a commodity can change as a result of a change in consumers income, their tastes…

Q: 1 Consider the two investments listed below with possible outcomes and probabilities: INVESTMENT (in…

A: Expected value formula: E(x)=∑xip(xi) The formula for standard deviation:…

Q: Three decision makers have assessed utilities for the problem whose payoff table appears below. s1…

A: a) Utility's functions  plot for decision maker A is represented as:

Q: A water company owns water pipes that burst often due to poor maintenance. The company can invest…

A: Maintenance incurred by a water company = GHS m Maintenance cost incurred will lead to 2 benefits:…

Q: True

A: The RD (risk differences) are measured by differences in the CI (cumulative incidences) in the…

Q: NewTech

A: Making a arboreous diagram to sketch out a course of action or a applied math likelihood analysis is…

Q: Standand devition of the Market I 1. What is the epected etum ona portfelio comprised of S000 of…

A: Standard deviation is the statistical measure of market volatility, measuring how widely prices are…

Q: Determine whether or not to stock a large supply of steel. There is uncertainty in the price of…

A: The present net worth of a project is the present value of all the future revenue generated from the…

Q: In the final round of a TV game show, contestants have a chance to increase their current winnings…

A: The winning amount increases from $1 million to $2 million. Wrong guess decreases the amount to…

Q: A building worth $100,000 is insured for $60,000 under a policy with an 80% co-insurance clause.…

A: Insurance is defined as the reimbursement of losses. It is provided by an insurance company where…

Q: Let's assume the city of Norman is comprised of high-productivity works (where their marginal…

A: (a) If the firm had perfect information, they would pay the high-productivity workers their marginal…

Q: 3 Emma u go years old and she owns a 300,000 (T-100) Life INS Palicy on her Life in which her…

A: Ans 1 - T-100 Policy of life insurance is guaranteed permanent life insurance which premiums are…

Q: If P(A)=1, then it means that event O will never happen will nossibly hannen sometime

A: Probability means how much possibility of happening something. there is always a different…

Q: to be awam to be awan alue of X th es)

A: When deciding on uncertain incomes from payoff strategies, consumers look at the concerned risks.…

Q: Jason is a Web page designer. He estimates that this summer, he has a 0.6 probability of making…

A: The expected wealth depends on the values of probabilities. Expected wealth is higher when there is…

Q: Consider a consumer with a medical bill of $5,000. He has a $4000 deductible and a 20 percent…

A: In, the above multi choice question we are given with a consumer having a medical bill of $5000, he…

Q: he number of families covered is   million and the premium is   per family per year.

A: The graph obtained from the prevoius solution is

Q: What is risk selection and discuss any 2 methods chat can be used to eliminate this.

A: Risk Selection  A related worry is risk selection, which occurs when insurers are incentivized to…

Q: Cost-effectiveness is a necessary condition of efficiency. Select one: O True O False

A: In simple terms, cost effectiveness means matching the worth of the result in contrast of its uses.…