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(Table: Insurance Claims) Five People Vary in Health Status

Question 7

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(Table: Insurance Claims) Five people vary in health status. Each person knows his or her own health status and expected medical bills, which are given in the table. These people are considering buying health insurance. Assume that each person is equally likely to file a claim. (Table: Insurance Claims)  Five people vary in health status. Each person knows his or her own health status and expected medical bills, which are given in the table. These people are considering buying health insurance. Assume that each person is equally likely to file a claim.   Suppose that the insurance company does not know the health status of any one person but does know the expected claims of the group as a whole. If the insurance company sets the premium based on the average expected claims of these five people, then the premium is ____. A)  $30,000 B)  $20,000 C)  $14,000 D)  $10,000 Suppose that the insurance company does not know the health status of any one person but does know the expected claims of the group as a whole. If the insurance company sets the premium based on the average expected claims of these five people, then the premium is ____.


A) $30,000
B) $20,000
C) $14,000
D) $10,000

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