Suppose a Radar-Activated Braking System That Can Help Prevent Crashes

question 16

Multiple Choice

Suppose a radar-activated braking system that can help prevent crashes is an option on a new car. It costs $600 and reduces the chance of dying in an auto accident by 1/700. The implicit value placed on life by a person who does not have the system installed is therefore:

• A) exactly $600.
• B) less than $420,000.
• C) at least $420,000.
• D) at least $432,000.

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