Rounding to the nearest whole number, the number of batches per year that should be ordered using the EOQ model is approximately 234.
To determine the number of batches per year using the EOQ (Economic Order Quantity) model, we need to use the following formula:
EOQ = √((2DS) / H)
Where:
D = Demand per year (833 units)
S = Setup cost per batch ($33)
H = Holding cost per unit per year ($1)
Substituting the given values into the formula:
EOQ = √((2 * 833 * 33) / 1)
EOQ = √(54978)
EOQ ≈ 234.43
Rounding to the nearest whole number, the number of batches per year that should be ordered using the EOQ model is approximately 234.
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Colin listed his assets and liabilities on a personal balance sheet.
Colin’s Balance Sheet (August 2013)
Assets
Liabilities
cash
$1,500
credit card
$500
stocks
$800
rent
$800
car
$5,000
car loan
$1,200
coin collection
$1,200
student loan
$5,000
Total
Total
Which statement is true about the total assets and the total liabilities?
The total of the assets and the liabilities are the same.
The total of the assets is greater than the total of the liabilities.
The total of the assets is less than the total of the liabilities.
The total of the assets cannot be compared to the total of the liabilities.
Answer:
B
Explanation:
the fundamental determinant of the elasticity of supply is how quickly per unit costs increase with an increase in production. the fundamental determinant of the elasticity of supply is how quickly per unit costs increase with an increase in production. false true
True, the fundamental determinant of the elasticity of supply is how quickly per unit costs increase with an increase in production. the fundamental determinant of the elasticity of supply is how quickly per unit costs increase with an increase in production.
How would you define elasticity?
Elasticity is a term used in economics to describe how much one economic variable changes in reaction to a change in another. If a product's price elasticity of demand is negative two, a 10% rise in price results in a 20% decrease in demand.
What are some examples of elasticity?
When anything is stretched or squeezed, it can regain its original shape thanks to its elastic properties. A rubber, for instance, may quickly restore its form after being stretched out significantly.
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Cycle Wholesaling sold merchandise on account, with terms n/60, to Sarah's Cycles on February 1 for $1,250 (cost of goods sold of $725). On February 9, Sarah's Cycles returned to Cycle Wholesaling one-quarter of the merchandise from February 1 (cost of goods returned was $195). Cycle Wholesaling uses a perpetual inventory system, and it allows returns only within 15 days of initial sale. Required:
Answer:
1. 1-Feb
Dr Accounts receivable 1,250
Cr Sales revenue 1,250
2 . 1-Feb
Dr Cost of goods sold 725
Cr Inventory 725
3. 9-Feb
Dr Sales revenue 312.50
Cr Accounts Receivable 312.50
4. 9-Feb
Dr inventory 195
Cr Cost of goods sold 195
5. 2-Mar
Dr Cash 937.50
Cr Accounts receivable 937.50
B. Gross profit percentage=43.47%
Explanation:
A. Preparation of the journal entries to record sales , goods return on February 9 and Cash collected on March 2
1 to 3 Preparation of the journal entries to record sales
1. 1-Feb
Dr Accounts receivable 1,250
Cr Sales revenue 1,250
2 . 1-Feb
Dr Cost of goods sold 725
Cr Inventory 725
3. 9-Feb
Dr Sales revenue 312.50
Cr Accounts Receivable 312.50
(1/4*1,250)
4. Preparation of the journal entry to record goods return on February 9
9-Feb
Dr inventory 195
Cr Cost of goods sold 195
5. Preparation of the journal entry to record collected on March 2
2-Mar
Dr Cash 937.50
Cr Accounts receivable 937.50
(1,250-312.50)
B. Calculation for the gross profit percentage for sales to Sarah's Cycles
First step is to find the gross profit
Net sales 937.50
Less Cost of goods sold (530)
(725-195 )
Gross profit 407.50
Now let calculate the Gross profit percentage using this formula
Gross profit percentage = Gross profit/Sales
Let plug in the formula
Gross profit percentage=407.50/937.50
Gross profit percentage=0.4347*100
Gross profit percentage=43.47%
The Alpine House, Inc., is a large retailer of snow skis. The company assembled the information shown below for the quarter ended March 31:
Amount
Sales $ 1,260,000
Selling price per pair of skis $ 450
Variable selling expense per pair of skis $ 50
Variable administrative expense per pair of skis $ 19
Total fixed selling expense $ 155,000
Total fixed administrative expense $ 105,000
Beginning merchandise inventory $ 70,000
Ending merchandise inventory $ 105,000
Merchandise purchases $ 285,000
Required:
1. Prepare a traditional income statement for the quarter ended March 31.
2. Prepare a contribution format income statement for the quarter ended March 31.
3. What was the contribution margin per unit?
Answer:
Refer to the below explanation
Explanation:
1. Traditional income statement.
Revenue $1,260,000
Cost of goods sold = Beginning inventory + purchases - Ending inventory
= $70,000 + $285,000 - $105,000
=$ 250,000
Gross profit= Sales - cost of goods sold
= $1,260,000 - $250,000
=$1,010,000
Administrative expenses = $19 × ($1,260,000/450) + $105,000
= $158,200
Selling expenses = $50 × ($1,260,000/450) + $155,000
=$295,000
EBITDA = $556,800
2. Contribution margin statement
Sales. = $1,260,000
Less
Total Variable cost:
Cost of goods sold =$250,000
Variable selling exp.
2800 × $50=$140,000
Administrative exp.
2800 × $19=$53,200
Total variable cost. =$56,800
Contribution margin =$1,203,200
Less
Total Fixed costs:
Selling expenses =$155,000
Administrative expenses=$105,000
Total fixed cost =$260,000
Net profit. = $943,200
3. Contribution margin per ratio
= Contribution margin / Quantity
=$1,203,200 / 2,800
=$430
Explain how transferring core credits from a community college and/or testing out of certain courses can save you money when attending college.
Transferring core credits from a community college and/or testing out of certain courses can save you money when attending college. College-level coursework from regionally accredited colleges would often transfer as long as you received a grade of at least "C" (2.0) and the course was comparable in scope and subject to coursework offered at your desired college.
What sets a college apart from a university?The main areas of difference between colleges and universities are program selections and degree categories. Larger institutions that grant both undergraduate and graduate degrees are referred to as universities. Liberal arts colleges, technical schools, and community colleges are all included under the umbrella word "college."
Is Harvard a college or a place of learning?Harvard University includes eight graduate and professional schools in addition to Harvard College, all of which provide courses to students with first degrees who are interested in pursuing master's or doctoral degrees in certain subjects.
It can be cheaper to attend college if you transfer core credits from a community college or if you test out of some courses. As long as you got a grade of at least "C" (2.0) and the course was comparable in breadth and subject to courses offered at your preferred college, college-level courses from regionally accredited colleges may frequently transfer.
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what is professional education!
Answer:
Professional education is a formal specialized training about a particular profession in which learners are taught the central concepts, principles, and techniques, and how these are applied in real practice, and the learners also acquire the necessary competencies needed for proper practice and behaviour.
Professional education is a formalized approach to specialized training in a professional school through which participants acquire content knowledge and learn to apply techniques. Although content is what the participant is expected to learn by attending professional school, such an education also helps the participant acquire the competencies needed for proper practice and behavior.
Please help, <3
Analyze two pricing strategies for their advantages and disadvantages and give reasons for a business to use each of those pricing strategies.
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Posttest
Your boss called you inta meeting this morning to tell you that he feels that you are not being as productive as you could be. He thinks you are wasting time on things that don't matter. What is the best strategy to address his concerns and to help you overcome whatever productivity issues you may have?
Approach your boss's concerns with an open mind, being transparent about your work activity, taking ownership of your progress, setting goals and deadlines, prioritizing your work, and using productivity tools can help to address any productivity issues you may be facing.
Tips that may help you approach the conversation with your boss in a productive manner:1. Listen carefully to your boss's concerns: Your boss's feedback is valuable, and it's important to listen to what they have to say about your productivity. Make sure to fully understand their concerns before responding.
2. Be transparent about your work:- Provide your boss with a detailed account of your work activities so that they can get a better sense of what you are spending your time on.
3.Take responsibility for improvement: As an employee, it's important to take ownership of your productivity issues and find solutions to any weaknesses that have been identified. Instead of blaming external factors, focus on what you can do differently to become more efficient and productive.
4. Set clear goals and deadlines: Work with your boss to set specific goals and deadlines for your work. This will help you stay focused and give you a clear sense of what you need to accomplish each day.
5. Prioritize your work: There are always going to be distractions and competing demands on your time, but it's important to prioritize your work based on what is most important and what will have the greatest impact on achieving your goals.
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(1). Five {5} advantages of manual office equipment
(2). Five {5} disadvantage of manual office equipment
Advantages of manual office equipment:
Low cost
No electricity needed
Durable and reliable
Simple to use and maintain
Portable
Disadvantages of manual office equipment:
Time-consuming and physically demanding
Limited capabilities compared to electric equipment
Inaccurate results
Dependent on operator's skill
Not suitable for heavy-duty tasks
Describe ways in which a verbal/linguistic learner prefers to learn.
Answer:
People with verbal-linguistic learning styles learn best when taught using spoken or written materials. They prefer activities that are based on language reasoning rather than abstract visual information. ... They usually enjoy written projects, speech and drama classes, debate, language classes, and journalism.
Explanation:
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When making decisions, managers often must decide between doing what is beneficial for the firm in the short term, and what is beneficial for both the firm and society in the long term. To address this conflict, a firm must
When making decisions, managers are often faced with a conflict between what is beneficial for the firm in the short-term and what is beneficial for both the firm and society in the long-term.
This conflict arises because the actions that benefit the firm in the short-term may not necessarily align with the interests of society as a whole, which can lead to negative consequences for both the company and society in the long-term.
To address this conflict, a firm must adopt a long-term orientation and consider the broader social and environmental impacts of its decisions. This means looking beyond immediate financial gains and recognizing that actions taken today can have far-reaching implications for the company's reputation, customer loyalty, employee morale, and overall sustainability.
Firms that prioritize social responsibility and sustainable business practices are more likely to build strong relationships with stakeholders, including customers, employees, investors, and regulators. They are also better equipped to weather economic downturns and other disruptions, as they have diversified their risk and invested in building resilient supply chains and communities.
Ultimately, the key to addressing the conflict between short-term gains and long-term benefits is a commitment to corporate social responsibility (CSR) and sustainable business practices. By prioritizing the needs of society and the environment alongside those of shareholders, firms can create value for all stakeholders over the long-term, ensuring their continued success and impact.
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The Toso Company uses the retail inventory method. The following information is available for the year ended December 31, 20X1: Inventory 1/1/2ex1 Net purchases for the year Net sales Cost Retail $ 420,eee $ 750,000 1,980,000 2,850,000 2,940, eee Applying the average cost retail inventory method, Toso's inventory at December 31, 20X1, is estimated at Applying the average cost retail inventory method, Toso's inventory at December 31, 20x1, is estimated at: Multiple Choice A. $449,667 B. $458,526 C. $40.000 D. 435.000
The estimated inventory at December 31, 20X1 using the average cost retail inventory method is A. $449,667..
To estimate Toso Company's inventory at December 31, 20X1 using the average cost retail inventory method, we need to calculate the cost-to-retail percentage.
The cost-to-retail percentage is calculated by dividing the cost of goods available for sale by the retail value of goods available for sale:
Cost-to-retail percentage = Cost of goods available for sale / Retail value of goods available for sale
Cost of goods available for sale = Beginning inventory + Net purchases
Retail value of goods available for sale = Beginning inventory + Net purchases - Net sales
Cost of goods available for sale = $420,000 + $750,000 = $1,170,000
Retail value of goods available for sale = $420,000 + $750,000 - $2,850,000 = $319,000
Cost-to-retail percentage = $1,170,000 / $3,190,000 = 0.3661
Using this cost-to-retail percentage, we can estimate the cost of ending inventory by multiplying the retail value of ending inventory by the cost-to-retail percentage.
Ending inventory at retail = $2,940,000 - $2,850,000 = $90,000
Ending inventory at cost = $90,000 x 0.3661 = $32,991
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True/False: the zamindar system of taxation established a landed gentry class and created peace and stability in british ruled india.
The statement ''the zamindar system of taxation established a landed gentry class and created peace and stability in british ruled india.'' is False.
The zamindar system of taxation in British ruled India did establish a landed gentry class but it did not create peace and stability. The system was exploitative and oppressive towards peasants who were forced to pay high taxes to the zamindars. This resulted in widespread poverty and famine in rural areas.
Additionally, the zamindars were given significant powers by the British which they often abused leading to further unrest and resistance from the Indian population. The system contributed to the growing dissatisfaction with British rule and was ultimately one of the reasons for the Indian independence movement.
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Listen Harrison drafts a will that is silent on the matter of trustee powers. He lives in a province where the trustee legislation does not incorporate the prudent investor principle. As a result, Harrison's personal representative will probably be able to invest the estate assets in: futures contracts. options. O equity mutual funds. O none of the above Question 3 (1 point) Listen Vinporti, needs to have a will drawn up for her estate plan. Edie advises Mrs. Viscarti to
Harrison drafts a will that is silent on the matter of trustee powers. He lives in a province where the trustee legislation does not incorporate the prudent investor principle. As a result, Harrison's personal representative will probably be able to invest the estate assets in: none of the above.
Because Harrison's personal representative is not empowered by law to invest the estate assets in futures contracts, options, or equity mutual funds if the province in which he resides does not include the prudent investor principle, the answer is "none of the above." The prudent investor principle is the criteria used to judge a trustee's investing decision and whether or not it was appropriate. It also requires the trustee to invest money with caution and prudence while considering the entire investment portfolio's composition and investment risk profile.
A prudent investment would be one that avoids unnecessary risk while achieving the investment goals. Hence, the correct answer is: none of the above.
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The market demand curve Group of answer choices is found by vertically adding the individual demand curves. slopes upward. represents the sum of the prices that all the buyers are willing to pay for a given quantity of the good. represents the sum of the quantities demanded by all the buyers at each price of the good.
Answer:
represents the sum of the quantities demanded by all the buyers at each price of the good.
Explanation:
The market demand curve is the total of all the individual demand curves in the market as mentioned. It depicts the quantity demanded with respect to the different prices
And in this the quantity demanded and the price of a product has an inverse relationship between each other
Therefore the last option is correct
7. Solve this two step equation:
3 x 5 – 7 = y
Answer:
y=8
Explanation:
15-7=y
8=y
y=8
Answer:
its 8
Explanation:
if u do 3 times 5 its 15, if u do 15-7 which equal 8 or y so y=8
The owner of a landscaping business has noticed that none of his competitors are including ponds or other water features in the gardens they create. The landscaper wants to determine the viability of this business opportunity What should this entrepreneur do FIRST before offering to design and build water features as part of his landscaping business? оооо
Contact the water department to see if they can support the extra demand for water.
Ask the customers in the area if they are interested in adding a water feature to their gardens.
Determine if there is a supply chain available. Perform a financial audit to determine if there is
enough money available to add the new service.
What the entrepreneur should do FIRST before offering to design and build water features as part of his landscaping business is: Ask the customers in the area if they are interested in adding a water feature to their gardens.
LandscapingSince none of his competitors are including ponds or other water features in their gardens.
When determining the viability of the business opportunity the first step is for the owner of the landscaping business to all ask the customers in the area whether they are interested in adding a water features to their garden.
Inconclusion what the entrepreneur should do FIRST before offering to design and build water features as part of his landscaping business is: Ask the customers in the area if they are interested in adding a water feature to their gardens.
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Answer:
Ask the customers in the area if they are interested in adding a water feature to their gardens...
Explanation:
A construction company is hiring new employees. Which scenario is an example of discrimination? (5 points)
Michael, who is 60 years old, is hired over Zara, 20 years old because he has a lot of experience.
Samantha, who happens to be in a wheelchair, is not hired because she does not have the required experience.
The company hires Bill and Tiara, who are equally qualified, for the same position but pays one of them less.
The company interviews the most qualified candidates, who happen to be of many different races.
Answer:
3. The company hires Bill and Tiara, who are equally qualified, for the same position but pays one of them less.
5 mins left!! whats the answerAt that amount of output where diminishing marginal returns first sets in, Select one: a. total product will begin to decline. b. none of the answers c. average product will begin to decline. d. margi
The answer to the question regarding the amount of output where diminishing marginal returns first sets in is option d. Marginal products will decline. In this scenario, as more units of a variable input, such as labor, are added to a fixed input, like capital, there will be a point where each additional unit of the variable input contributes less to the total output. This is known as diminishing marginal returns, and it is characterized by the decline in the marginal product.
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Please show your work for each problem. Problem 1 - Direct Materials Variances Bellingham Company produces a product that requires 11 standard pounds per unit. The standard price is $9.5 per pound. If 4,300 units used 48,700 pounds, which were purchased at $9.31 per pound, what is the direct materials (a) price variance, (b) quantity variance, and (c) cost variance? Show a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number
To calculate the direct materials variances, we need to compare the actual quantities and prices of materials purchased and used with the standard quantities and prices.
Given data:
Standard pounds per unit = 11 pounds
Standard price per pound = $9.5
Actual units produced = 4,300 units
Actual pounds used = 48,700 pounds
Actual price per pound = $9.31
(a) Price Variance:
Price Variance = (Actual Price - Standard Price) * Actual Quantity
= ($9.31 - $9.5) * 48,700 pounds
= (-$0.19) * 48,700 pounds
= -$9,253
The price variance is -$9,253, which represents a favorable variance because the actual price paid per pound ($9.31) is lower than the standard price ($9.5).
(b) Quantity Variance:
Quantity Variance = (Actual Quantity - Standard Quantity) * Standard Price
= (48,700 pounds - (4,300 units * 11 pounds)) * $9.5
= (48,700 pounds - 47,300 pounds) * $9.5
= 1,400 pounds * $9.5
= $13,300
The quantity variance is $13,300, which represents an unfavorable variance because more pounds of materials were used (48,700 pounds) compared to the standard quantity (47,300 pounds).
(c) Cost Variance:
Cost Variance = Price Variance + Quantity Variance
= -$9,253 + $13,300
= $4,047
The cost variance is $4,047, which represents an unfavorable variance because the favorable price variance is offset by the unfavorable quantity variance.
The direct materials variances for Bellingham Company are as follows:
(a) Price Variance: -$9,253 (favorable)
(b) Quantity Variance: $13,300 (unfavorable)
(c) Cost Variance: $4,047 (unfavorable)
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Marketing activities often cost 50 percent or more of the selling price of a product or service. A. TRUE B. FALSE
The given statement " Marketing activities often cost 50 percent or more of the selling price of a product or service. " is true marketing activities only account for around half of every dollar customers spend.
Marketing is the collective development, communication, delivery, and trading of products and services that benefit customers, clients, partnerships, and society as a whole. Advertising your business has the advantage of engaging customers and assisting them in making a purchase decision.
In addition to assisting in the development and maintenance of demand, applicability, reputation, and competition, a marketing strategy should be included in your business plan. Marketing is fundamental to the development of a brand. It explains your brand's benefits, costs, and USP, as well as the reasons why customers should choose it.
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PLEASE HELP ME!!!!! I need to know the best ways to make a small business known. I just started a small Scentsy® business with my mom. I don't do social media and my moms is mainly her private friends even though it is public.
Answer:
Buy ads and get social media
Explanation:
list the stages of team development
Answer:
Stage 1: Forming. Feelings. ...
Stage 2: Storming. Feelings. ...
Stage 3: Norming. Feelings. ...
Stage 4: Performing. Feelings. ...
Stage 5: Termination/Ending. Some teams do come to an end, when their work is completed or when the organization's needs change.
If someone owes you $100 right now, but they don't pay you for a year, you have lost the opportunity to collect _______________on that money.
Answer:
Interest
Explanation:
Opportunity cost of the money is the Interest that could have been earned on that money has the borrower saved it in the bank. Thus, the missing word here is Interest.
What type of relationship do a lawyer and a client have?
A) an administrative relationship
B) a labor relationship
C) an agency relationship
D) a tort relationship
Answer:
An Agency relationship but it's D on Edge
Explanation:
The type of relationship a lawyer and a client have is an agency relationship. Thus option (C) is correct.
What is an agency?An agency is a business, firm, or organization that provides a specific service. Sometimes but not always the agencies also work on behalf of another group, business, or person.
Some agencies work for the private sector like an advertising agencies, employment agencies, and travel agencies. Some are government agencies for example they are part of the public sector.
The advertising agencies, add agencies, or creative agencies are firms that focus on creating, planning, and handling advertising. In fact, some employment agencies belong to the government; therefore, they may also be in the public sector.
The type of relationship a lawyer and a client have is an agency relationship. Therefore, option (C) is correct.
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Why is it important for o evaluate your advertising campaign when it is complete?
Answer:
A well-documented evaluation of your campaign builds credibility and respect. It helps determine if your ads are hitting the target audience, and what are their opinions and feedback on it.
Explanation:
The evaluation of your advertisement campaign helps in enhancing transparency and the report showcases the achievements you have attained during this and also helps showcase the entire campaign to every key stakeholder. It helps in building trust across the various departments in the company and enables them to measure the strengths and weaknesses of the campaign, in order to adjust for future campaign drives.
You are the manager of a project that has an operating leverage rating of 2.8 and a required return of 14 percent. Due to the current state of the economy, he expects sales to decrease by 7 percent next year. What change should you expect in operating cash flows next year given your sales forecast?
Answer:
The change should you expect in operating cash flows next year would be 19.60%
Explanation:
In order to calculate the change should you expect in operating cash flows next year given your sales forecast we would have to make the following calculation:
change should you expect in operating cash flows=operating leverage rating*percentage of decrease sales next year
change should you expect in operating cash flows=2.8*0.07
change should you expect in operating cash flows=19.60%
The change should you expect in operating cash flows next year would be 19.60%
Middle manager Sara is engaged in the team builder role when she
A) negotiates for a larger budget for her team.
B) represents her group at a company meeting.
C) holds a meeting to talk about team accomplishments.
D) helps the group solve a technical problem.
Answer:
The correct answer is C) holds a meeting to talk about team accomplishments.
In the context of the team builder role, holding a meeting to discuss team accomplishments is a typical task for a middle manager like Sara. This activity helps foster a positive team environment, boosts team morale, and recognizes the efforts and achievements of the team members. It also allows for open communication and collaboration within the team, facilitating the sharing of ideas and best practices. While the other options may also be tasks performed by a middle manager, they do not specifically align with the team builder role.
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an increase in variable costs facing a monopoly will cause ______________ in price and ______________ in quantity.
A. an increase, an decrease
B. a decrease ; an decrease
C. a decrease ; a increase
An increase in variable costs facing a monopoly will cause an increase in price and a decrease in the quantity. (Option A).
What is Variable Cost?An expense that fluctuates in relation to production output or sales is referred to as a variable cost. Variable costs rise in response to rising production or sales, and fall in response to falling output or sales.
Additionally, variable costs rise or fall in accordance with the volume of goods produced, while fixed costs remain constant regardless of output levels. Gross profit is significantly influenced by both fixed and variable costs; when production costs rise, gross profit decreases.
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Suppose people from Virginia are more likely to lose expensive jewelry than people from Maryland. Specifically, there is an 80 percent probability that a person from Virginia will lose a $1,000 item of jewelry during a year, but only a 20 percent probability that a person from Maryland will. Assume that the population of Virginia and Maryland are the same. 1) If an insurance company that covers both Maryland and Virginia assumes that people in either state are equally likely to buy jewelry insurance, what will the actuarially fair insurance premium be? 2) If the utility of the people from Utah and Idaho is given by U(x)=ln(x) and they have current wealth of $10,000 each, will these individuals buy jewelry insurance at the actuarilly fair insurance premium? 3) Given your results in part 2, will the insurance premiums be correctly computed? If not, what should the premium be? What will the utility for each type of person be? 4) Suppose that an insurance company charged different premiums for people from Virginia and Maryland. How would these individuals' maximum utilities compare to those computed in parts 2 and 3.
The actuarially fair insurance premium would be $500 in this scenario.
To determine the actuarially fair insurance premium, we need to consider the probabilities of loss and the value of the insured item for each state.
Given that there is an 80% probability of a person from Virginia losing a $1,000 item of jewelry during a year, the expected loss for Virginia can be calculated as follows:
Expected loss for Virginia = Probability of loss in Virginia * Value of the insured item
Expected loss for Virginia = 0.80 * $1,000 = $800
For Maryland, the probability of loss is 20%, and the value of the insured item remains the same ($1,000):
Expected loss for Maryland = Probability of loss in Maryland * Value of the insured item
Expected loss for Maryland = 0.20 * $1,000 = $200
Since the population of Virginia and Maryland is assumed to be the same, we can consider an equal number of insured individuals from each state.
To determine the actuarially fair insurance premium, the insurer needs to collect enough premiums to cover the expected losses in each state. In this case, the expected losses for Virginia and Maryland are $800 and $200, respectively.
To calculate the actuarially fair insurance premium, we take the weighted average of the expected losses:
Actuarially fair insurance premium = (Probability of Virginia * Expected loss for Virginia) + (Probability of Maryland * Expected loss for Maryland)
Assuming an equal number of insured individuals from each state, the probabilities are 0.5 for both Virginia and Maryland.
Actuarially fair insurance premium = (0.5 * $800) + (0.5 * $200) = $400 + $100 = $500
Therefore, the actuarially fair insurance premium would be $500 in this scenario.
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