Suppose a human life is worth $10 million.Installing a better lighting system in the city park would reduce the risk of someone being murdered there from 2.3 to 1.8 percent over the life of the system.The city should install the new lighting system if its cost does not exceed
A) $50,000.
B) $180,000.
C) $230,000.
D) $500,000.

Question

Quizplus · Accepted Answer

The expected number of murders prevented is 2.3% - 1.8% = 0.5%. The expected value of the lives saved is 0.5% * $10 million = $50,000.

Suppose a Human Life Is Worth $10 Million