Highway engineers have proposed improving a dangerous stretch of highway at a cost of $2 million.They expect that it will reduce the risk of someone dying in an accident over the life of the highway from 22.1 percent to 5.7 percent.The project would be worth doing as long as a human life is worth at least
A)$114,000.
B)$328,000.
C)$442,000.
D)$10 million.

Question

Quizplus · Accepted Answer

To find the value of a human life, we need to calculate the cost per life saved. The cost of the project is $2 million and the project is expected to reduce the risk of death from 22.1% to 5.7%, which means that the project would save 16.4 lives (per 100 people). Therefore, the cost per life saved is $2 million/16.4 = $121,951.22.

Since we want to find the minimum value for a human life such that the project is worth doing, we need to find the point at which the value of a human life equals or exceeds $121,951.22.

Choice B ($328,000) is the closest option to this value, so the best choice is B.

Highway Engineers Have Proposed Improving a Dangerous Stretch of Highway