Every person has $1,000 to spend. There are two groups of people: 100 sick people and 300 healthy people. A sick person visits the hospital with probability p= 0.25. A healthy person visits the hospital with probability p= 0.05. Any hospital visit costs $400. All individuals have the following expected utility function: EU= (1−p)√Cg+p√Cb
a) What is the actuarially fair price for a sick person? For a healthy person?b)Suppose the insurance company can distinguish between sick and healthy individuals. What price(s) will they charge each group for full insurance?
c)Suppose the insurance company cannot distinguish between sick and healthy individuals. If they charge one price to everyone for full insurance, what price x do they need to charge to make zero expected profits when everyone buys? (Hint: It is somewhere in between the actuarially fair prices, but not halfway since groups are of different sizes.)

Titus manufacturing, inc. provided the following information for the year: purchases - direct materials $91,000 plant utilities and insurance 68,000 indirect materials 11,170 indirect labor 4270 direct materials used in production 99,000 direct labor 117,500 depreciation on factory plant & equipment 4000the inventory account balances as of january 1 are given below. direct materials $44,000 work-in-progress inventory 10,000 finished goods inventory 50,000what is the ending balance in the direct materials account? $135,000 $36,000 $110,170 $6000

Richardson hired j.c. flood company, a plumbing contractor, to correct a stoppage in the sewer line of her house. the plumbing company's 'snake' device, used to clear the line leading to the main sewer, became caught in the underground line. to release it, the company excavated a portion of the sewer line in richardson's backyard. in the process, the company discovered numerous leaks in a rusty, defective water pipe that ran parallel with the sewer line. to meet public regulations, the water pipe, of a type no longer approved for such service, had to be replaced either then or later, when the yard would have to be excavated again. the plumbing company proceeded to repair the water pipe. though richardson inspected the company's work daily and did not express any objection to the extra work involved in replacing the water pipe, she refused to pay any part of the total bill after the company completed the entire operation. j.c. flood company then sued richardson for the costs of labor and material it had furnished. (c) for what, if anything, should richardson be liable? explain."

howard, fine, & howard is an advertising agency. the firm uses an activity-based costing system to allocate overhead costs to its services. information about the firm's activity cost pool rates follows: stooge company was a client of howard, fine, & howard. recently, 7 administrative assistant hours, 3 new ad campaigns, and 8 meeting hours were incurred for the stooge company account. using the activity-based costing system, how much overhead cost would be allocated to the stooge company account?