The Occupational Safety and Health Administration (OSHA) has determined that the probability of a worker dying from exposure to a hazardous chemical used in the production of fertilizer is 0.008. The cost of imposing a regulation that would ban the chemical is $32 million. If the value of a human life is equal to $10 million, how many people must the policy affect in order for the benefits to exceed the costs?

Question

Business

Reynaldo Schneider

26 January, 16:40

The Occupational Safety and Health Administration (OSHA) has determined that the probability of a worker dying from exposure to a hazardous chemical used in the production of fertilizer is 0.008. The cost of imposing a regulation that would ban the chemical is $32 million. If the value of a human life is equal to $10 million, how many people must the policy affect in order for the benefits to exceed the costs?

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Walker · Answer 1

The correct Answer of this question is 4 people.

Four people must affect in order for the benefits to exceed cost.

Explanation:

In the senscario given in the question it is asked how many people must die in order to make decision of imposing a regulation a lucrative one.

The cost of imposing ban on hazardous chemical is 32 million dollars and cost of one, two and three human death is 10 million dollars, 20 million dollars and 30 million dollars respectively. So till three death the cost of imposing ban is more than the human lives lost. However, if four peoples die the cost of ban i. e 32 million dollars become less than that of cost of human life i. e 40 million dollars. So if four and more than four people are affected if is worthwhile to impose the policy.