(Question 1) Imagine a new infectious disease emerges, called MARS-21. Every individual has a 5% chance of contracting MARS-21, and all people face equal risk of infection. Treatment costs $50,000 bu
We are confident that we have the best essaywriters in the market. We have a team of experienced writers who are familiar with all types of essays, and we are always willing to help you with any questions or problems you might face. Plus, our writers are always available online so you can always get the help you need no matter where you are in the world.
Order a Similar Paper Order a Different Paper
(Question 1)
Imagine a new infectious disease emerges, called MARS-21. Every individual has a 5% chance of contracting MARS-21, and all people face equal risk of infection. Treatment costs $50,000 but is effective, fast, and fully curative – so individuals only consider the financial costs of MARS-21 when evaluating their best course of action.
Now, imagine a vaccine exists, which reduces your risk of infection to 1%.
Save your time - order a paper!
Get your paper written from scratch within the tight deadline. Our service is a reliable solution to all your troubles. Place an order on any task and we will take care of it. You won’t have to worry about the quality and deadlines
Order Paper NowSomeone without insurance would pay up to _____________ for the vaccine, whereas someone with full insurance would pay _______________ .
(First answer / Second answer)
a. 2000 / 0
b. Not enough information
c. 2000 / 2000
d. 0 / 0
(Question 2)
Again, imagine the scenario above, in which there’s a 5% chance of contracting MARS-21 with a cost of treatment of $50,000. Assume
no one takes the vaccine
– what would the actuarially fair premium for full insurance be in this market? Assume there are no taxes or loading fees to consider.
a. 50,000
b. 2,500
c. 0
d. 2,000
(Question 3)
Now, assume that the insurer imposes a 15% coinsurance rate. You should also assume that premiums are paid at the beginning of the year, so the insurer cannot make premiums depend on whether an individual gets vaccinated.
If the cost of treatment is $50,000 and the probability of infection is 1% with a vaccine and 5% without one, what is the most an insured person would pay to get vaccinated?
a. 0
b. 300
c. 2,000
d. 1,700
Do you have a lot of essay writing to do? Do you feel like you’re struggling to find the right way to go about it? If so, then you might want to consider getting help from a professional essay writer. Click one of the buttons below.
Order a Similar Paper Order a Different Paper