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RISK POOLING: Combining the uncertainty of individuals into a calculable risk for large groups. For example, you may or may not contract the flu this year. However, if you're thrown in with 99,999 other people, then health-care types who spend their lives measuring the odds of an illness, can predict that 1 percent of the group, or 1,000 people, will get the flu. The uncertainty is that they probably don't know which 1,000 people, they only know the number afflicted. This little bit of information is what makes risk pooling possible. If the cost is $50 per illness, then an insurance company can insure your 100,000-member group against flu if they collect $50,000 ($50 x 1,000 sick people), or 50 cents per person. By agreeing to pay the cost of each sick person in exchange for the 50 cent payments, the insurance company has effectively pooled the risk of the group.
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CIRCULAR FLOW A model of the continuous movement of production, income, and the services of scarce resources that flow between producers and consumers. In particular, the circular flow is a model of the continuous production and consumption interaction among the four major sectors of the macroeconomy--household, business, government, and foreign--using the three macroeconomic markets--product, resource, and financial. The circular flow model provides a easy way of getting the "big picture" and of seeing how the key parts of the macroeconomy fit together.
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ORANGE REBELOON
[What's This?]
Today, you are likely to spend a great deal of time touring the new suburban shopping complex wanting to buy either several magazines on time travel or 500 feet of telephone cable. Be on the lookout for defective microphones.
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This isn't me! What am I?
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In 1914, Ford paid workers who were age 22 or older $5 per day -- double the average wage offered by other car factories.
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"Adversity is another way to measure the greatness of individuals. I never had a crisis that didn't make me stronger. " -- Lou Holtz, Football Coach
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L/O
Letter of Offer
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