John is planning to travel to a country where there is some risk of contracting yellow fever. The direct market price for the medication that prevents yellow fever is $125. It would take him 2 hours to visit his doctor and get the prescription filled. The opportunity cost of his time is $25/hour.
If he contracts yellow fever we assume that he will be sick and not able to work full days for two weeks. Under these conditions, let’s assume he can work half days and has no vacation or sick time to use. His company will not pay him when he is sick and not working. His out of pocket expenses for medication, doctors’ visits, and lab tests to treat the yellow fever will be $500. His normal salary is $1,000 per week.
John believes that his chance of getting yellow fever without preventative medicine is about 20%. His chance of getting yellow fever with the medication is 0%.
There is no pain and suffering to be considered in this problem.
What is the maximum price that John would pay for the medication if he has no insurance?
Answer: $300
All of the following is the same as the previous problem except now there is a change to the question. Now, he still has a chance of getting yellow fever with the medication. The chance of him getting yellow fever if he takes the medication that prevents yellow fever is 10%. All other facts remain the same from the previous problem:
John is planning to travel to a country where there is some risk of contracting yellow fever. The direct market price for the medication that prevents yellow fever is $125. It would take him 2 hours to visit his doctor and get the prescription filled. The opportunity cost of his time is $25/hour.
If he contracts yellow fever we assume that he will be sick and not able to work full days for two weeks. Under these conditions, let’s assume he can work half days and has no vacation or sick time to use. His company will not pay him when he is sick and not working. His out of pocket expenses for medication, doctors’ visits, and lab tests to treat the yellow fever will be $500. His normal salary is $1,000 per week.
John believes that his chance of getting yellow fever without preventative medicine is about 10%. His chance of getting yellow fever with the medication is 0%.
There is no pain and suffering to be considered in this problem.
What is the maximum price that John would pay for the medication if he has no insurance?
John is planning to travel to a country where there is some risk of contracting yellow fever. The direct market price for the medication that prevents yellow fever is $125. It would take him 2 hours to visit his doctor and get the prescription filled. The opportunity cost of his time is $25/hour.
If he contracts yellow fever we assume that he will be sick and not able to work full days for two weeks. Under these conditions, let’s assume he can work half days and has no vacation or sick time to use. His company will not pay him when he is sick and not working. His out of pocket expenses for medication, doctors’ visits, and lab tests to treat the yellow fever will be $500. His normal salary is $1,000 per week.
John believes that his chance of getting yellow fever without preventative medicine is about 20%. His chance of getting yellow fever with the medication is 10%.
There is no pain and suffering to be considered in this problem.
From a purely economic perspective would John buy the medication?
