Mel Is Thinking of Going on a Cruise

Question 57
Multiple Choice

Mel is thinking of going on a cruise.Mel values a cruise in nice weather at $2,000 and values a cruise in bad weather at $50.According to a very reliable source,the probability of nice weather is 60% and the probability of bad weather is 40%.Trip insurance is sometimes available.If purchased,it allows travelers to delay the cruise until the weather is nice. Suppose that the price of the cruise is $1200.If Mel is not risk averse,Mel should buy trip insurance A)never. B)only if it costs less than $780. C)only if it costs less than $20. D)only if it costs less than $50