Use the Following to Answer Questions

question 155

Multiple Choice

Use the following to answer questions:
Scenario: Health Costs
Alan is hoping for a healthy year, meaning that he would have zero health costs. Given his habits, there is a 40% chance that Alan will develop a health issue resulting in $50,000 in health costs. Assume these are the only two conditions that could exist for Alan in the coming year.
-(Scenario: Health Costs) Look at the scenario Health Costs. Suppose that Alan decides to change his habits dramatically and as a result decreases the probability of his developing a health problem such that he now has a 20% chance of becoming ill. What is the expected value of Alan's health costs now?

• A) $0
• B) $10,000
• C) $20,000
• D) $2,000

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Definitions:

Responsibility

The obligation to carry out duties correctly and the accountability for the outcomes of those actions.

Logistical Arrangements

The planning and coordination of the detailed organization and implementation of a complex operation, often involving the movement of people or goods.

Ground Rules

Basic guidelines or agreed-upon principles that govern the conduct of an activity or process.

Decision Standards

The benchmarks or criteria used to evaluate the options in a decision-making process, which can include aspects such as cost, efficiency, ethical considerations, or impact on stakeholders.