A private pilot wishes to insure his airplane for 200000


A private pilot wishes to insure his airplane for $200,000. The insurance company estimates that a total loss may occur with probability 0.002, a 50% loss with probability 0.01, and a 25% loss with probability 0.1. Ignoring all other partial losses, what premium should the insurance company charge each year to realize an average profit of $500?

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Microeconomics: A private pilot wishes to insure his airplane for 200000
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