Carla wants to purchase insurance for her landscaping business. She determines that she needs at least $137,500 of property coverage and at least $159,500 of liability coverage. In order to gain this amount of coverage, she can purchase any combination of insurance plans A and B from two different insurance companies. For each dollar she spends on Plan A, she gets $250 of property coverage and $300 of liability coverage. Plan B provides $260 of property coverage and $290 of liability coverage for each dollar of premium paid. How much should she spend on each plan to minimize her insurance cost?

Question

Quizplus · Accepted Answer

By spending $290 on Plan A, Carla gets $72,500 in property coverage and $87,000 in liability coverage. Spending $250 on Plan B gives her $65,000 in property coverage and $72,500 in liability coverage. Together, these meet her coverage needs at the minimum cost.

Carla Wants to Purchase Insurance for Her Landscaping Business