It Is Flu Season,and You Are Trying to Decide If

question 6

Multiple Choice

It is flu season,and you are trying to decide if you should get a flu shot.When you are healthy,you earn $144 a day,but if you become ill,you will only earn $100 a day.There is a 25% chance you will get the flu without a flu shot.If you do receive the flu shot,then you definitely will not get the flu.What is the actuarially fair price for the flu shot given this information?

• A)$44
• B)$33
• C)$22
• D)$11

---

Definitions:

Selling

The process of promoting and transferring ownership of a product or service to customers in exchange for money or value.

Administrative Expenses

Costs related to the general operation of a business, including salaries of executives, office supplies, and utilities.

Direct Labor

The wages paid to workers directly involved in the production of products or the delivery of services.

Planning Budget

A budget prepared at the beginning of the budgeting period, reflecting expected revenues and expenses based on forecasted levels of operations.