Pirates have been intensely attacking ships off the shore of Somalia this year. Boat owners have reportedly coughed up more than $30 million in ransom and insurance premiums have shot up. The pirate activity and increase in premiums means that the expected wealth of boat owners who sail near Somalia is
A) decreasing.
B) increasing.
C) staying the same.
D) decreasing only if they have insurance.

Question

Quizplus · Accepted Answer

The expected wealth of boat owners is decreasing due to the costs associated with ransom payments and increased insurance premiums, which outweigh any potential gains from sailing near Somalia.

Pirates Have Been Intensely Attacking Ships Off the Shore of Somalia