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17 Dec 2010, 08:33
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Difficulty:

85% (hard)

Question Stats:

56% (02:29) correct 44% (01:50) wrong based on 463 sessions

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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? A.$600
B. $1000 C.$3800
D. $5300 E.$6200
[Reveal] Spoiler: OA
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Re: Health insurance Plan [#permalink]

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17 Dec 2010, 09:04
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anilnandyala 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

Pay out for plan A: Cost-$1,000 or Cost-0.5*Cost=0.5*Cost, when 0.5*Cost<$1,000;
Pay out for plan B: 0.8(Cost-$300); The question is: for which of the following costs the pay outs are the same. C-1,000=0.8(C-300) --> for C=3,800 and 0.5C=0.8(C-300) --> for C=800. As we have only$3,800 listed then it must be a correct answer.

Or you can use backsolving for this question:
A. C=$600: pay out for plan A will be 0.5*600=300 (as 0.5*600<1,000) and pay out for plan B will be 0.8*(600-300)=240; B. C=$1000: pay out for plan A will be 0.5*1,00=500 (as 0.5*1,000<1,000) and pay out for plan B will be 0.8*(1,000-300)=560;

C. C=$3800: pay out for plan A will be 3,800-1,000=2,800 (as 0.5*3,800>1,000) and pay out for plan B will be 0.8*(3,800-300)=2,800 --> 2,800=2,800; D. C=$5300: pay out for plan A will be 5,300-1,000=4,300 (as 0.5*5,300>1,000) and pay out for plan B will be 0.8*(5,300-300)=4,000;

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22 May 2012, 19:54
Hi Bunnel.

According to me the 2 equations are:
0.8(C – 300) + 300= 1000 OR 0.8(C – 300) + 300= 0.5C

But i am confused with the question you formed the two equations

C-1,000=0.8(C-300)--->1^st and 0.5C=0.8(C-300)

Since the questions says if the cost is above 1000 he will pay which ever is lower, but according to your 1st equation he is paying more that 1000 i.e is 2800, please clarify if i am wrong, awaiting for your reply
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22 May 2012, 22:19
Cares wrote:
kotela wrote:
Hi Bunnel.

According to me the 2 equations are:
0.8(C – 300) + 300= 1000 OR 0.8(C – 300) + 300= 0.5C

But i am confused with the question you formed the two equations

C-1,000=0.8(C-300)--->1^st and 0.5C=0.8(C-300)

Since the questions says if the cost is above 1000 he will pay which ever is lower, but according to your 1st equation he is paying more that 1000 i.e is 2800, please clarify if i am wrong, awaiting for your reply

You are reading the question wrong. It is asking when the insurance company will pay the same amount of money not the insured.

0.8(C–300) = C–1000
OR
0.8(C–300) = 0.5C

Solving the first equation gives us C=3800
Solving the second equation gives us C=800

Since 800 isn't one of the answers we can eliminate it and 3800 is the only possible answer.

The correct answer is C.

Ya you are i misread the question....thanks for that and +1 kudos for you
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03 Dec 2013, 07:50
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22 Mar 2015, 05:33
TooLong150 wrote:
Algebra is truly a loser in this question. Backsolving is the fastest and most effective method here.

Having to rely on backsolving is truly hit or miss when it comes to timing.

If you've mastered algebra, not only can you virtually solve most of the problems on the test, but this problem can also be completed around 30 seconds. Seems like a pretty fast time to me
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Re: Health insurance Plan A requires the insured to pay $1000 or [#permalink] ### Show Tags 28 Oct 2015, 09:21 1 This post received KUDOS Expert's post anilnandyala 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?

A. $600 B.$1000
C. $3800 D.$5300
E. $6200 Case 1: What Insured pay is 1000 (as per plan A) = 300+(20/100)*(C-300) Solving this equation, C = 3800 Case 2: What Insured pay is (50/100)*C (as per plan A) = 300+(20/100)*(C-300) Solving this equation, C = 800 Answer: Option C _________________ Prosper!!! GMATinsight Bhoopendra Singh and Dr.Sushma Jha e-mail: info@GMATinsight.com Call us : +91-9999687183 / 9891333772 http://www.GMATinsight.com/testimonials.html Feel free to give a Kudos if it is a useful post . Current Student Joined: 12 Aug 2015 Posts: 308 Concentration: General Management, Operations GMAT 1: 640 Q40 V37 GMAT 2: 650 Q43 V36 GMAT 3: 600 Q47 V27 GPA: 3.3 WE: Management Consulting (Consulting) Followers: 4 Kudos [?]: 211 [0], given: 1474 Health insurance Plan A requires the insured to pay$1000 or [#permalink]

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20 Nov 2015, 11:56
"Health insurance Plan A requires the insured to pay $1000 or 50% of total cost, whichever is lower." - this confused me much. if i quoted the fee in my job this way i would be fired =) my clients would understand this without doubt: if the cost is 10 000 then the client has to pay only 1000 =))) yuuuupi _________________ KUDO me plenty Intern Joined: 29 Dec 2014 Posts: 25 Concentration: Operations, Strategy GMAT 1: 690 Q48 V35 GMAT 2: 710 Q48 V39 Followers: 0 Kudos [?]: 13 [0], given: 8 Re: Health insurance Plan A requires the insured to pay$1000 or [#permalink]

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19 Jan 2016, 12:25
Absolutely agree...pathetic and horridly ambiguous wording....sch kind of wording never appears on gmat...pooh to Manhattan! The stmnt makes it seem as if we HV to choose whether 1000 bucks or C/2 is the payout, C being insurance cost...will sue GMAT if such poorly worded question appears.
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Re: Health insurance Plan A requires the insured to pay $1000 or [#permalink] ### Show Tags 06 Sep 2016, 15:01 Definitely C ! .. According to my calculations, C should be the answer. Please let me know if it's right. Re: Health insurance Plan A requires the insured to pay$1000 or   [#permalink] 06 Sep 2016, 15:01
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