The Who-Needs-A-Doctor? Company Makes a Do-It-Yourself Rhinoplasty Kit

Essay

The Who-Needs-A-Doctor? Company makes a do-it-yourself rhinoplasty kit. The company is deciding whether to include a safety feature that would cost $40 for each kit. The company estimates the probability of death without the safety feature is 1/10,000 and the death cost per kit is $50. Based on this information, answer the following questions:
a. What is the value the company has placed on a life?
b. What is the company's cost-benefit recommendation?
c. If the company has overestimated the probability of death and the true probability of death is 1/15,000, what is the true death cost per rhinoplasty kit?
d. If the company has overestimated the probability of death and the true probability of death is 1/15,000, what would the true cost-benefit recommendation be for the company?
e. If the company has correctly estimated the probability of death but has underestimated by one-half the true value of a life, what is the true death cost per rhinoplasty kit?
f. If the company has correctly estimated the probability of death but has underestimated by one-half the true value of a life, what would the true cost-benefit recommendation be for the company?