MGMAT CAT 3

ankur.agrawal wrote:Health insurance Plan A requires the insured to pay $1000 or 50% of total cost, whichever is lower. Plan B requires the insured to pay the initial $300, but then pays 80% of the cost over $300. Which of the following is a cost level for which both insurance plans pay out the same amount?

$600

$1000

$3800

$5300

$6200

The Question is quite easy. I see a error in the question. Do others see it too?

sanju09 wrote:

ankur.agrawal wrote:Health insurance Plan A requires the insured to pay $1000 or 50% of total cost, whichever is lower. Plan B requires the insured to pay the initial $300, but then pays 80% of the cost over $300. Which of the following is a cost level for which both insurance plans pay out the same amount?

$600

$1000

$3800

$5300

$6200

The Question is quite easy. I see a error in the question. Do others see it too?

I see nothing wrong with this question. Key is that the give away cost for both plans is same. Algebra would kill your time, consider plugging in and ideally start with the choice C, for Plan A, 50% of $3800 is more than $1000, and hence $1000 will be borne by the insured and the rest $2800 by the company. Whereas in Plan B, the initial $300 will be borne by the insured and 80% in its excess that's 80% of $3500 = $2800 by the company.

It clicked! The two give away costs are same.


[spoiler]C[/spoiler]

ankur.agrawal wrote:

sanju09 wrote:

ankur.agrawal wrote:Health insurance Plan A requires the insured to pay $1000 or 50% of total cost, whichever is lower. Plan B requires the insured to pay the initial $300, but then pays 80% of the cost over $300. Which of the following is a cost level for which both insurance plans pay out the same amount?

$600

$1000

$3800

$5300

$6200

The Question is quite easy. I see a error in the question. Do others see it too?

I see nothing wrong with this question. Key is that the give away cost for both plans is same. Algebra would kill your time, consider plugging in and ideally start with the choice C, for Plan A, 50% of $3800 is more than $1000, and hence $1000 will be borne by the insured and the rest $2800 by the company. Whereas in Plan B, the initial $300 will be borne by the insured and 80% in its excess that's 80% of $3500 = $2800 by the company.

It clicked! The two give away costs are same.


[spoiler]C[/spoiler]

MQuestion is :

"Plan B requires the insured to pay the initial $300, but then pays 80% of the cost over $300." how do we know who pays 80% of the cost over $300. It may be the insured or the insurer. Am i clear?

GMATGuruNY wrote:

ankur.agrawal wrote:

sanju09 wrote:

ankur.agrawal wrote:Health insurance Plan A requires the insured to pay $1000 or 50% of total cost, whichever is lower. Plan B requires the insured to pay the initial $300, but then pays 80% of the cost over $300. Which of the following is a cost level for which both insurance plans pay out the same amount?

$600

$1000

$3800

$5300

$6200

The Question is quite easy. I see a error in the question. Do others see it too?

I see nothing wrong with this question. Key is that the give away cost for both plans is same. Algebra would kill your time, consider plugging in and ideally start with the choice C, for Plan A, 50% of $3800 is more than $1000, and hence $1000 will be borne by the insured and the rest $2800 by the company. Whereas in Plan B, the initial $300 will be borne by the insured and 80% in its excess that's 80% of $3500 = $2800 by the company.

It clicked! The two give away costs are same.


[spoiler]C[/spoiler]

MQuestion is :

"Plan B requires the insured to pay the initial $300, but then pays 80% of the cost over $300." how do we know who pays 80% of the cost over $300. It may be the insured or the insurer. Am i clear?

There is no ambiguity: Plan B is clearly the subject of pays. If the insured were required to pay the 80%, the sentence would read:

Plan B requires the insured to pay the initial $300 and then 80% of the cost over $300.

But pays -- which is parallel with requires -- makes it clear the Plan B is the subject of both verbs:

Plan B requires...but then pays 80%...