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Assume that the probability of a driver getting into an accident is 3.4%, the
average cost of an accident is $11,116.37, and the overhead cost for an
insurance company per insured driver is $170. What should this driver's
insurance premium be?

Respuesta :

$547.96. Just took the test and this was the right option.

barmansuraj489

The correct answer is $547.96

Why is this the correct answer?

  • Total cost is = (3.4% × $11,116.37) + $ 170
  • The equation is Fixed cost + Variable cost , where the overhead cost becomes the fixed cost.

What is variable cost?

A variable cost is a corporate expense that changes in proportion to how much a company produces or sells. Variable costs increase or decrease depending on a company's production or sales volume they rise as production increases and fall as production decreases.

To learn more about Insurance policy refer :

https://brainly.com/question/16267577

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