Hedonic wage studies indicate a willingness to pay of $100 per person for a 1/100,000 (0.00001) reduction in the risk of a premature death from exposure to radon. The exposed population is 5,000,000 (5 million) people. An impending environmental regulation to control radon is expected to reduce the risk of premature death from 4/100,000 (0.00004) to 2/100,000 (0.00002) per year in that exposed population of five million people.

1. Based on the information provided above, what is the implied value of a statistical life (VSL)?

2. Suppose that your boss asks you to tell her the maximum this regulation could cost and still have the benefits be as large as the costs. What is your answer?