Mary is planning to travel to a country where there is some risk of contracting malaria. Themarket price for the medication that prevents malaria is $400 (the preventative medicine is notcovered by insurance). It would take her 2 hours to visit her doctor and get the prescriptionfilled. The opportunity cost of her time is $50/ hour.If she contracts malaria we assume that she will be sick for two weeks and unable towork. Expenses for medication, doctors' visits, and lab tests to treat the malaria will be$1500. She will lose wages and benefits of $1000 for each week she is away from work.Assume the cost of the pain and suffering is $2000.Mary believes that her chance of getting malaria without preventative medicine is about one in10.A) What is the maximum price that Mary would pay if insurance covered the full cost oftreatment if she got malaria?B) What is the maximum price that Mary would pay for the medication if she has noinsurance?

A. If the insurance covered the full cost of its treatment, then the maximum amount that it would be…

Answered: Mary is planning to travel to a country…

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter2: The One Lesson Of Business

Section: Chapter Questions

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