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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

What is an actuarially fair insurance policy?

To determine

The meaning of actuarially fair insurance policy needs to be determined.

Explanation

Risk is not fixed for all type of persons or firms. Like, in case of health insurance, few people have more risk due to their bad habits or genetic problems or in case of property insurance, few areas have high risk of thefts and fire, some drivers are safer than others.

The insurance company will define risk group according to the probability of adverse effects of happening and non happening of events and charge the premium lower for lower risk and higher for higher risk areas or peoples...

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