if you charge an urban householder $209.50 per year for insurance, what is the largest profit you could earn on that one policy for the year? what is the largest possible loss for year?
To determine the largest profit and largest possible loss on the insurance policy, we need to know the cost of providing the insurance coverage and any potential claims.
1. To calculate the largest profit:
If we assume that the cost of providing insurance coverage and any potential claims is zero, then the largest profit would be the entire amount charged for the policy:
Profit = Amount charged for the policy - Cost of providing insurance coverage
Profit = $209.50 - $0 = $209.50
2. To calculate the largest possible loss:
If we assume that there is a claim for the full amount of the coverage on the policy, then the largest possible loss would be the entire amount charged for the policy:
Loss = Amount charged for the policy - Amount claimed
Loss = $209.50 - $209.50 = $0
So, under these assumptions, the largest profit would be $209.50, and the largest possible loss would be $0.