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Business, 02.12.2021 02:00 lmolmlm5420
Suppose people cannot tell for sure whether they will fall ill in any given year. High-risk people correctly perceive their chance of falling ill in a year is 30 percent, and low-risk people correctly perceive that their chance of falling ill is 10 percent. Both high-risk and low-risk people have to pay $10,000 in medical expenses if they fall ill, and nothing if they remain healthy.
Required:
a. What are the expected annual medical expenses of a high-risk person?
b. What are the expected annual medical expenses of a low-risk person?
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Answers: 2
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Suppose people cannot tell for sure whether they will fall ill in any given year. High-risk people c...
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