The Jefferson National Life Insurance Company offers a wide variety of insurance products, including whole-life and term policies. The company has compiled the following data concerning policy sales during recent years:
|
Whole-life
|
|
Term
|
|
|
Year
|
*Price
|
Quantity
|
*Price
|
Quantity
|
|
2004
|
$2.00
|
240,000
|
$1.50
|
100,000
|
|
2005
|
2.00
|
200,000
|
1.45
|
130,000
|
|
2006
|
1.90
|
230,000
|
1.45
|
150,000
|
|
2007
|
1.80
|
280,000
|
1.40
|
200,000
|
|
2008
|
1.80
|
238,000
|
1.33
|
270,000
|
What is the point price elasticity of demand for whole-life insurance? What is the point price elasticity of demand for term insurance? Evaluate the percentage change in whole-life demand given a 1% change in the price of term insurance. Is term insurance a substitute for whole-life?