Suppose you face a choice between a certain income of $3,000, or a 50-50 chance of income of $1,500 or $4,500. Suppose you prefer the 50-50 chance of $1,500 or $4,500 1. True or False: You are not risk averse
a) True
b) False
Suppose that a disease affects 4% of the population and that everyone is equally likely to get the disease. Treatment for this disease costs $28,000. Assume that this disease, and necessary treatment, represent the only healthcare costs in this population
2. The expected cost of healthcare is $.
3. If people (Prefer/ Do Not Prefer) to pay the expected cost of healthcare with certainty, rather than take on the 4% risk of having to pay the full cost of the treatment, they are risk averse.
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