Explain all option ......you will not explain all option then I will give you down upvote.. Most people who own homes also have homeowner's insurance. Among other things, thesepolicies cover the house in case of fire. Consider two homeowners (Chris and Leslie) whosehouse is in a forest. They can take actions to reduce the risk of fire; keeping fire extinguishershandy, clearing brush and trees to a "defensible perimeter," and removing leaves and branchesfrom the roof are fairly standard strategies. More extreme measures include installing a fire-resistant roof. The graph below shows the marginal cost and marginal benefit curves. Thereduction in precaution caused by the insurance policy will be about:Marginal Cost (MC) and 60Marginal Benefit (MB)9.331.673.3350403020Moral Hazard00246MCMB noinsuranceMB withinsurance810Quantity of precaution (A)

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Answered: Most people who own homes also have…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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ЕОC 12.02 Suppose you are the mayor of a town and you want to increase safety at an intersection. A traffic light will increase safety and reduce fatality risk by 0.5% but costs $100,000. Suppose the value of human life is estimated at $10 million. Should you spend the money to install the traffic light? (Hint: to multiply 1% by 200 you follow this process: 0.01 x 200 = 2). Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Yes, since the expected benefit ($500,000) exceeds the cost. b Yes, since the expected benefit ($150,000) exceeds the cost. No, since the expected benefit ($50,000) is lower than the cost. d No, since the expected benefit ($15,000) is lower than the cost.
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