Asked by Thomas Ramirez on Jun 14, 2024
Verified
(Scenario: Health Costs) Use Scenario: Health Costs.When Alan's probability of developing a health problem decreases,holding everything else constant,Alan's expected value of health care costs: 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.
A) increases.
B) decreases.
C) stays constant.
D) increases,decreases,or stays constant.
Expected Value
A calculation used in statistics and probability theory to determine the anticipated result of an event, considering all possible outcomes and their probabilities.
Health Care Costs
The total expenses for services rendered by healthcare providers, including hospitals, doctors, and medication.
- Utilize the principle of expected value in determining healthcare expenses and insurance rates.
Verified Answer
YG
Yajaira GonzálezJun 16, 2024
Final Answer :
B
Explanation :
When Alan's probability of developing a health problem decreases, holding everything else constant, his expected value of health care costs decreases. This means that if Alan's probability of developing a health issue decreases, his expected health care costs will decrease as well. Therefore, the best answer is B, decreases.
Learning Objectives
- Utilize the principle of expected value in determining healthcare expenses and insurance rates.