An insurance company sells only one type of health insurance policy and only one type of life insurance policy. The monthly premium for a health insurance policy is $80. If the insurance company took in a total $5000 in premiums, what was the monthly premium of a life insurance policy?
1.
The total revenue from health insurance premiums was 4/5 of the total revenue the company received from premiums.
2.
The insurance company sold 2.5 times as many health insurance policies as life insurance policies.
Equation
This topic has expert replies
-
- Master | Next Rank: 500 Posts
- Posts: 429
- Joined: Wed Sep 19, 2012 11:38 pm
- Thanked: 6 times
- Followed by:4 members
GMAT/MBA Expert
- Brent@GMATPrepNow
- GMAT Instructor
- Posts: 16207
- Joined: Mon Dec 08, 2008 6:26 pm
- Location: Vancouver, BC
- Thanked: 5254 times
- Followed by:1268 members
- GMAT Score:770
I think you're missing part of the question (in red)[email protected] wrote:An insurance company sells only one type of health insurance policy and only one type of life insurance policy. The monthly premium for a health insurance policy is $80. If the insurance company took in a total $5000 in premiums, what was the monthly premium of a life insurance policy?
1.
The total revenue from health insurance premiums was of the total revenue the company received from premiums.
2.
The insurance company sold 2.5 times as many health insurance policies as life insurance policies.
Cheers,
Brent
- theCodeToGMAT
- Legendary Member
- Posts: 1556
- Joined: Tue Aug 14, 2012 11:18 pm
- Thanked: 448 times
- Followed by:34 members
- GMAT Score:650
Is something missing in the question?[email protected] wrote:An insurance company sells only one type of health insurance policy and only one type of life insurance policy. The monthly premium for a health insurance policy is $80. If the insurance company took in a total $5000 in premiums, what was the monthly premium of a life insurance policy?
1.
The total revenue from health insurance premiums was of the total revenue the company received from premiums.
2.
The insurance company sold 2.5 times as many health insurance policies as life insurance policies.
R A H U L
-
- Master | Next Rank: 500 Posts
- Posts: 429
- Joined: Wed Sep 19, 2012 11:38 pm
- Thanked: 6 times
- Followed by:4 members
have made the changes! Its actually 4/5
Brent@GMATPrepNow wrote:I think you're missing part of the question (in red)[email protected] wrote:An insurance company sells only one type of health insurance policy and only one type of life insurance policy. The monthly premium for a health insurance policy is $80. If the insurance company took in a total $5000 in premiums, what was the monthly premium of a life insurance policy?
1.
The total revenue from health insurance premiums was of the total revenue the company received from premiums.
2.
The insurance company sold 2.5 times as many health insurance policies as life insurance policies.
Cheers,
Brent
- theCodeToGMAT
- Legendary Member
- Posts: 1556
- Joined: Tue Aug 14, 2012 11:18 pm
- Thanked: 448 times
- Followed by:34 members
- GMAT Score:650
Health Policy(HP) & Life Policy(LP)
HP, x = 80
LP, y = A
Total = 5000
80(x) + (A)(y) = 5000 -(1)
TO find: A
Statement 1:
80(x) = 4/5 (5000) = 4000
Ay = 1000 --(2)
We can have multiple values of A & y .
INSUFFICIENT
Statement 2:
x = 2.5(y)
80(2.5y) + (A)(y) = 5000
INSUFFICIENT
Combining...
80(X) = 1000
Also, x = 2.5y--> we can get "y"
By putting the value of (y) in (2) we can get A
SUFFICIENT
Is it Answer [spoiler]{C}[/spoiler]?
HP, x = 80
LP, y = A
Total = 5000
80(x) + (A)(y) = 5000 -(1)
TO find: A
Statement 1:
80(x) = 4/5 (5000) = 4000
Ay = 1000 --(2)
We can have multiple values of A & y .
INSUFFICIENT
Statement 2:
x = 2.5(y)
80(2.5y) + (A)(y) = 5000
INSUFFICIENT
Combining...
80(X) = 1000
Also, x = 2.5y--> we can get "y"
By putting the value of (y) in (2) we can get A
SUFFICIENT
Is it Answer [spoiler]{C}[/spoiler]?
R A H U L
GMAT/MBA Expert
- Brent@GMATPrepNow
- GMAT Instructor
- Posts: 16207
- Joined: Mon Dec 08, 2008 6:26 pm
- Location: Vancouver, BC
- Thanked: 5254 times
- Followed by:1268 members
- GMAT Score:770
Let H = the number of health insurance policies[email protected] wrote:An insurance company sells only one type of health insurance policy and only one type of life insurance policy. The monthly premium for a health insurance policy is $80. If the insurance company took in a total $5000 in premiums, what was the monthly premium of a life insurance policy?
1. The total revenue from health insurance premiums was 4/5 of the total revenue the company received from premiums.
2. The insurance company sold 2.5 times as many health insurance policies as life insurance policies.
Let L = the number of life insurance policies
Let p = the monthly premium on a life insurance policy
So, 80H + pL = 5000
Target question: What is the value of p?
Statement 1: The total revenue from health insurance premiums was 4/5 of the total revenue the company received from premiums.
Total revenue = $5000
(4/5)($5000) = $4000
So, 80H = $4000.
Take 80H + pL = 5000 and replace 80H with $4000 to get 4000 + pL = 5000, which simplifies to pL = 1000
Since there are many possible values for p that satisfy this equation, statement 1 is NOT SUFFICIENT
Statement 2: The insurance company sold 2.5 times as many health insurance policies as life insurance policies.
In other words, H = 2.5L
Take 80H + pL = 5000 and replace H with 2.5L to get 80(2.5L) + pL = 5000, which simplifies to be 200L + pL = 5000
Since there are many possible values for p that satisfy this equation, statement 2 is NOT SUFFICIENT
Statements 1 and 2 combined
From the two statements we get two equations:
200L + pL = 5000
pL = 1000
Subtract the bottom equation from the top equation to get: 200L = 4000, which means L = 20
Now that we know L = 20 and pL = 1000, we can see that p = 50
Since we can answer the target question with certainty, the combined statements are SUFFICIENT
Answer = C
Cheers,
Brent
-
- Master | Next Rank: 500 Posts
- Posts: 429
- Joined: Wed Sep 19, 2012 11:38 pm
- Thanked: 6 times
- Followed by:4 members
But why cant we take 1/5 as the part for life insurance, aren't we already given 5000 as the total value?
GMAT/MBA Expert
- Brent@GMATPrepNow
- GMAT Instructor
- Posts: 16207
- Joined: Mon Dec 08, 2008 6:26 pm
- Location: Vancouver, BC
- Thanked: 5254 times
- Followed by:1268 members
- GMAT Score:770
We are considering this information.[email protected] wrote:But why cant we take 1/5 as the part for life insurance, aren't we already given 5000 as the total value?
Statement 1 essentially tells us that the company collected $1000 in Life Insurance policies.
In other words, pL = 1000.
HOWEVER, this doesn't tell us the value of p (the life insurance premium)
Consider these two conflicting cases:
case a: L = 100 and p = 10
case b: L = 10 and p = 100
Cheers,
Brent