Tracy Johnson produces and promotes outdoor rock concerts throughout the summerm

Question

Tracy Johnson produces and promotes outdoor rock concerts throughout the summermonths in southeastern United States. This summer she has numerous concertsscheduled on different dates. The main threat to the success of these concerts is rain. If itdoes not rain, then Tracy, the producer, expects to make a profit of $20,000 from each
concert. If it does rain, then she will lose $12,000 ( rock star’s fees, advertising costs,
stadium rental, administrative costs, etc.). For this time of year the National WeatherService states that the probability of rain is 0.4.

3. Assuming the National Weather Service’s forecast is accurate, do you believe the

insurance company has charged too little or too much? Explain.

Explanation / Answer

Insurance amount = $1000

Expected loss = 0.4x12,000 = $4800

So, the insurance company havew charged her too little

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.