Assume the following facts at a particular point in time: A. There is a 20 percent, or .20 probability, that the appropriate dosage of a painkiller will relieve your headache. B. Headache relief provides you with $30 worth of actual benefits.
1) The monetary cost of the appropriate dosage is $7.50. Would you purchase the painkiller? Why or why not?
2) Would you purchase the painkiller if headache relief provides you with $50 of actual benefits because of an important job interview? Why or why not?