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(solution) An insurance company has found that the severity of proper-ty



An insurance company has found that the severity of proper-ty damage in a fire is positively related to the number of fire-fighters arriving at the scene.a.Draw a diagram that depicts this finding with number offirefighters on the horizontal axis and amount of propertydamage on the vertical axis. What is the argument madeby this diagram? Suppose you reverse what is measured onthe two axes. What is the argument made then?b.In order to reduce its payouts to policyholders, should theinsurance company therefore ask the city to send fewerfirefighters to any fire?

 


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Sep 13, 2020

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