Consider a household that possesses $200 comma 000 worth of valuables such as jewelry. This household faces a 0.02 probability of a burglary, where she would lose jewelry worth $70 comma 000. Suppose it can buy an insurance policy for $15 comma 000 that would fully reimburse the $70 comma 000. The household's utility function is U(X)equals2Upper X Superscript 0.5. Should the household buy this insurance policy? The household ▼ should should not buy this policy.

The household should not buy the insurance policy.

Data and Calculations:

Value of jewelry = $200,000

Probability of a burglary = 0.02

Probability of no burglary = 0.98 (1 - 0.02)

Loss from burglary = $70,000

Value of jewelry after burglary = $130,000 ($200,000 - $70,000)

Cost of insurance = $15,000

Expected value of jewelry after the burglary = $198,600 {($200,000 x 0.98) + ($130,000 x 0.02)}

Expected loss after burglary = $1,400 ($200,000 - $198,600)

Thus, the household should not buy the insurance policy.  It will pay more insurance premium ($15,000) than the expected value of loss ($1,400).

Learn more about insurance premium here: link

The household should not buy this policy

Explanation:

The probability of burglary is

$200,000 * 0.02 = $4,000

The insurance policy costs $15,000

The loss probability is lower than the cost of insurance policy

E(U) = (Jewelry Worth - Jewelry loss due to burglary + Insurance cover - Insurance policy cost) * 0.5

E(U) $200,000 - $70,000 + $70,000 - $15,000

E(U) = $

E(U) $430.11

the correct answer would be b, when, queen, calder hall and london.

explanation:

we always capitalize words when a paragraph or sentence is starting, when an important name is used, when a place is being written, or simply when a noun is used, etc. so in this sentence, sentence is starting from 'when', so it will be written in capital letters. secondly, queen is considered to be an important person, so it will also be written in capital letter. next, the name of the town is mentioned, i-e calder hall, which will also be written in capital letters. in the last,   city name is being used, 'london', which will also be written in capital letters. so option b is the most appropriate one.

the assumption the narrator makes in this excerpt is that the messages he heards were going to hurt the narrator's mom; the narrator just springs in to action. the narrator doesn't specify in this excerpt why he believes that the messages present a problem that requires protection.