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Esther and Cammy both work at the same company and earn $80,000 per month. Assume all income is consumed. There is a 2% chance that Esther will lose her job and a 6% chance that Cammy will lose her job this month. If either loses her job, she earns $0. Suppose the government provides social insurance to both Cammy and Esther that will fully cover $80,000 of monthly income and charges each a premium $3,200. Assuming Cammy and Esther are the only participants, what is the expected cost of this program after considering both revenue and expected payout?
Sagot :
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