There are 200 people of two types on the road: good drivers and bad drivers. good drivers (g) have a 1% chance of causing an accident while bad drivers (b) have a 5% chance of causing an accident. the proportion of bad drivers is 0.5, so the proportion of good drivers is 0.5. the cost of an accident is $6,000. good drivers have a willingness to pay for insurance of $200 while bad drivers have a willingness to pay of $400. a. suppose the insurance company knows each driver’s type. what premium would the insurance company charge each type of driver? (assume the insurance company breaks even, so the premium is equal to the expected cost.) 1 b. now suppose that the insurance company does not know the driver’s type. what would the insurance company’s expected profit be if it charged premiums based on the individual’s self-reported type? c. now suppose that the insurance company does not know the driver’s type. what premiums would the insurance company charge if they did not have any information on the driver’s type? is there a pooling equilibrium?

Instructions: use the following information to construct the 2000 balance sheet and income statement for carolina business machines. round all numbers to the nearest whole dollar. all numbers are in thousands of dollars. be sure to read the whole problem before you jump in and get started. at the end of 1999 the firm had $43,000 in gross fixed assets. in 2000 they purchased an additional $14,000 of fixed asset equipment. accumulated depreciation at the end of 1999 was $21,000. the depreciation expense in 2000 is $4,620. at the end of 2000 the firm had $3,000 in cash and $3,000 in accounts payable. in 2000 the firm extended a total of $9,000 in credit to a number of their customers in the form of accounts receivable. the firm generated $60,000 in sales revenue in 2000. their cost of goods sold was 60 percent of sales. they also incurred salaries and wages expense of $10,000. to date the firm has $1,000 in accrued salaries and wages. they borrowed $10,000 from their local bank to finance the $15,000 in inventory they now have on hand. the firm also has $7,120 invested in marketable securities. the firm currently has $20,000 in long-term debt outstanding and paid $2,000 in interest on their outstanding debt. over the firm's life, shareholders have put up $30,000. eighty percent of the shareholder's funds are in the form of retained earnings. the par value per share of carolina business machines stock is

Scenario: you have advised the owner of bond's gym that the best thing to do would be to raise the price of a monthly membership. the owner wants to know what may happen once this price increase goes into effect. what will most likely occur after the price of a monthly membership increases? check all that apply. current members will pay more per month. the quantity demanded for memberships will decrease. the number of available memberships will increase. the owner will make more money. bond's gym will receive more membership applications.

What would not cause duff beer’s production possibilities curve to expand in the short run? a. improved manufacturing technology b. additional resources c. increased demand