Mrs Seigal has two alternative activities to help relieve her backache. In the f

Question

Mrs Seigal has two alternative activities to help relieve her backache. In the first, she can visit a physiotherapist. The total time for physioterapist visit, including travel and waiting, is two hours. Mrs Siegal earns a eage of $20 an hour. Physiotherapists charge $50 per visit, and Mrs Seigal does not have any health insurance. As a second alternative, Mrs Siegal can take pain killers. Each pill costs 50 cents, and Mrs Seigal needs to take 30 pills per month. The two treatments are not equally effective. The physiotherapy visits yield 10 additional healthy days per month, while the pills yield 6 healthy days.

a. If Mrs Siegal can only choose one alternative, and if she wants to maximize the most healthy days per dollar that she gets, which option will she choose?

b. If the price of a pill ncreases to $3, which option will she choose?

Explanation / Answer

a)
Cost of visiting physiotherapist = loss of wages + fees of the physiotherapist
= 2 hrs*20 $/hr + 50 $ = 40+50 = 90 ($)
Benefits of visiting physiotherapist = 10 healthy days /month
no. of healthy days/$ = 10/90 = 0.11 days.

Cost of pills treatment = 30 * 0.50 = 15 ($) per month
Benefits = 6 healthy days/ month.
no. of healthy days/ $ = 6/15 = 0.40
So, pills treatment is better and shall be chosen. (ANSWER)

b)
if pills cost $3 per pill, cost of pills treatment = 3*30 = 90 $
so, no. of healthy days per $ = 6/90 = 0.067
Here, visit to physiotherapist is better and shall be chosen.

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