Assume the following group of 150 potential insured’s for health insurance:                             High risk group (50 potential insured’s)               Expected Annual Cost of Health Care Expenditures = $3600/insured                 Medium risk group (50 potential insured’s)               Expected Annual Cost of Health Care Expenditures = $2400/insured                 Low risk group (50 potential insured’s)               Expected Annual Cost of Health Care Expenditures = $1200/insured       Also assume that the insurer is unable to distinguish one class from another and yet the   insured’s have good information regarding their particular risk.   What would be the expected annual cost of health care per insured if all were insured?

In the market for barley, if the price of ethanol (which is made from corn, a crop that competes with barley for farmland) increases dramatically, the _____ barley would _____.

A restaurant manager has estimated that the price elasticity of demand for meals is 2. If the restaurant increases menu prices by 5%, she can expect the number of meals sold to decrease by ___________ and total revenue to ___________.

Look at the figure below: The Demand and Supply of Wheat. If there is an increase in demand of 2,000 bushels at each price, the equilibrium price and quantity will be              and               bushels, respectively.

Although a combination of risk treatments is used to handle most risks, generally speaking, risks classified as high in frequency and high in severity are best handled by which of the following?

The drawing depicts a hand drill – if the drill bit jams when subjected to forces as shown in the drawing (values noted below) determine the absolute values of the internal shear forces acting on the cross section of the drill bit at A. Be sure to use the correct units. a = 3 in, b = 9 in, c = 6 in, d = 6 in, e = 6 in, f (handle  from center line of drill) = 9 in. R = 10 lb, Q = 50 lb, P = 30 lb

With regard to experience rating, which of the following statements is true?

If you are told that a member fails when 1000 lbs is applied to it axially, and you only want it to be rated at 250 lbs – what factor of safety are you using in it’s design?

 What is the rationale for an insurer including a coinsurance clause in a property insurance contract? Just telling me how the recovery is calculated when a coinsurance clause is in the contract is not sufficient. I want to know the explanation for why it’s included.

Why are exclusions necessary?