Question: Frieda has been exposed to a deadly disease. The probability that she will contract the disease is very small, but if she were to contract the disease, she would be sure to die. Frieda's doctor has told her that there is a painless, hassle-free treatment that would be sure to prevent her from contracting the disease. However, this treatment is not free. Frieda feels that she knows the probability of contracting the disease, and she has told her doctor that she is indifferent between paying $1,000 for the treatment and taking her chances with no treatment. Now, assume that her micromort value is $5. What is the probability Frieda assigns to contracting the disease? (Assume we are on the linear region of Frieda's micromort curve.)
a. .0002
b. 0.0001
c. 0.005
d. 0.002