(Question 1) Imagine a new infectious disease emerges, called MARS-21. Every individual has a 5% chance of contracting MARS-21, and all people face equal risk of infection. Treatment costs $50,000 bu

(Question 1) 

Imagine a new infectious disease emerges, called MARS-21. Every individual has a 5% chance of contracting MARS-21, and all people face equal risk of infection. Treatment costs $50,000 but is effective, fast, and fully curative - so individuals only consider the financial costs of MARS-21 when evaluating their best course of action. 

Now, imagine a vaccine exists, which reduces your risk of infection to 1%. 

Someone without insurance would pay up to _____________ for the vaccine, whereas someone with full insurance would pay _______________ .

(First answer / Second answer)

a. 2000 /  0

b. Not enough information

c. 2000 / 2000

d. 0 / 0

(Question 2) 

Again, imagine the scenario above, in which there's a 5% chance of contracting MARS-21 with a cost of treatment of $50,000. Assume no one takes the vaccine - what would the actuarially fair premium for full insurance be in this market? Assume there are no taxes or loading fees to consider. 

a. 50,000

b. 2,500

c. 0

d. 2,000