An insurance company offers three policy options. The probability a car will be damaged
in a given year is 5%, and if a car is damaged,
the cost of the repairs will be $1000. Which
option has the least expected annual cost for
the car owner? Explain.

Insurance Policy Options

Annual. Deductible
(A) 900. (A) 0
(B) 800. (B) 400
(C) 700. (C) 1000

step-by-step explanation:

the revenue of the fitness center, y, is the product of two factors: the number of members and the fee paid by each member. there are 320 members now, but number of members goes down by 10 for each $5 increase in fees, so if x is the number of $5 price increases then members is equal to (320 - 10x). since the fee is currently $45, and the fee increases by $5 for every price bump x, the fee is given by (45 + 5x). so, revenue y is given by y = (320 - 10x)(45 + 5x).