Question Details

MATH 30 WEEK 2 READ & DISCUSS THE APPLICATION

Read & Discuss the Application Auto Insurance


"MATHEMATICAL MODEL" is a fancy way of saying that real-world data can be described by a mathematical function--that is, a description of the mathematical relationship between two variables.  A function can be represented by a formula, a graph, a table of values, or a verbal description.

For example, the expression "straight-line depreciation" tells us that a linear model is used to depreciate an object's value. Since the slope of a straight line is constant, saying "straight-line depreciation", means that the object is depreciating by the same amount every year.

You have probably bought auto insurance for yourself or your family. The horizontal axis of the graph below shows driver age--the independent variable, and the vertical axis shows the number of drivers involved in fatal accidents per 100,000 licensed drivers--the dependent variable.  In other words, the graph illustrates the relationship between fatal accident frequency and driver age.
DISCUSS:  Write a short paragraph describing how this model relates to auto insurance pricing.  [There is no "right" answer; I want to hear what you think.]  The discussion contributes toward your points for class participation.
 

Source: National Highway Traffic Safety Administration)