Consider the following screening test for cancer applied to 100,000 people of whom 100 have cancer. Each test costs $6.50, picks up 75% of cancer cases., and additionally, 12% of the time, falsely diagnoses cancer. Detection of cancer (rightly or wrongly) leads to a further exact diagnostic test that costs $10O. Correct early detection of cancer by the test is valued at $10,000 What is the marginal benefit of doing the test? What are the marginal costs of doing the test Is the first test worthwhile? Why or why not
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- JUST ANSWER SUBPART 1 There are two individuals, Individual A and Individual B. Individual A has an income (Y) of 500 million Rupiah per year. If Individual A is sick, he will lose 25% of his income. Meanwhile, Individual B has an income (Y) of 100 million Rupiah per year, and if Individual B is sick, he will lose 75% of his income. The probability of Individual A and Individual B being sick is the same, which is 10%. If the satisfaction level of Individual A and Individual B is determined by their income level, based on the following function U(Y)=ln Y, would Individual A and Individual B prefer not to have health insurance? Explain Faced with fair actuarially insurance, how much premium is offered to Individual A? Is the premium rate offered the same for Individual B? Explain with the support of graphic illustrations. The government decides to provide compulsory health insurance with a premium rate for Individual A and Individual B, which is 2% of the income of each individual. In…Farmer Brown faces a 25% chance of there being a year with prolongeddrought, with zero yields and zero profit, and he faces a 75% chance of a normal year, with good yields and$100,000 profit. These probabilities are well-known. Suppose that an insurance company offered a droughtinsurance policy that pays the farmer $100,000 if a prolonged drought occurs. Assume that the farmer’sutility function is u(c) = ln(c). He has initial wealth of $40,000. What is the economic intuition on why X > Y? Confine your answer to at most three sentences.A person lives for 3 years with a disease and the current standard of care for that disease means he/she lives with a utility level of 0.7 . If that person takes a new medicine (Medicine A) because of which his/her utility level increases to 0.8, If another new medicine (Medicine B) prolongs the patient’s life by 2 years, at a utility level of 0.7,-Calculate the new QALY
- If the expected age of death for a male aged 20 is 75, then a 20-year-old man who dies it's considered to have lost how many years of life?Match the term with its corresponding definition.___ Attributable risk___ Attributable risk percent___ Relative Risk___ Incidence rateA. Compares the incidence rate of the exposed to the incidence rate of theunexposed.B. The proportion of incidence cases among the exposed that are due to theexposure.C. The number of new cases of disease in a population divided by the total numberof persons in the population who were at risk for disease during a specified periodof time.D. The absolute difference in the incidence rate between the exposed and theunexposed.In the days when the epidemic started, the price of the mask, which is normally $ 0.25 , has climbed up to $ 8 in the market. In this period, on average, a mask found buyers in the market for $ 4.Mask supply and demand functions:Qd = a - bPQs = -c + dPQd = QsLet's assume that it is. Here you can choose the numerical values of the a, b, c, d parameters to solve the problem. When making solutions, use them parametrically. a)Using the above information, plot the supply and demand functions for the mask market. Show consumer and producer surplus values on the chart. b)If the mask price is $ 6, write the consumer and producer residual value using the integral. (calculation is not required.) c)The Ministry of Health has announced the mask price as $ 1. According to this explanation, write the residual value of the producer and consumer using Integral. (calculation is not required)
- An individual has the utility function U(I) = I^(1/2), where I is their net income. (Note that I to the exponent/power of 1/2 is the same as the square root of I.) The individual starts with $1600 in income. The individual has a 20% probability of being very sick, 30% probability of being slightly sick, and 50% probability of being healthy. If the individual is sick, they lose net income because they need to pay healthcare costs. The healthcare costs are $1600 if they are very sick, $700 if they are slightly sick, and $0 if they are healthy. Please use this information for the following parts of this question unless otherwise specified. What is the individual's expected utility? Suppose a health insurance company offers the individual a full insurance contract. What is the actuarially fair, full insurance premium for this individual? What is the individual's expected utility if they purchase a full insurance contract at the actuarially fair, full insurance premium?John wants to buy a used car. He knows that there are two types of car in the market, plums and lemons. Lemons are worse quality cars and are more likely to break down than plums. John is willing to pay £10, 000 for a plum and £2, 000 for a lemon. Unfortunately, however, he cannot distinguish between the two types. Sellers can offer a warranty that would cover the full cost of any repair needed by the car for y ∗ years. Considering the type and likelihood of problems their cars can have, owners of plums estimate that y years of guarantee would cost them 1000y, owners of lemons estimate that the cost would be 2000y. John knows these estimates and decides to offer £10, 000 if a car comes with y ∗ years of warranty, £2, 000 if a car comes without warranty. For which values of y ∗ is there a separating equilibrium where only owners of plums are willing to offer the y ∗ -years warranty? Clearly explain your reasoning.Now consider a different insurance company that does not have the inclination to tailor contracts specifically to individuals. Instead, it will offer a “standard contract” with the premium r =$100 and payout q=$500 to anyone who will purchase it. a. Peter has healthy-state income IH = $500 and sick-state income IS = $0. He has probability of illness p=0.1. Is the standard contract fair and/or full for Peter? If he ends up getting sick, what will his final income be? b. Tim has IH = $500 and IS = $0, but a probability of illness p = 0.2, higher than Peter’s. Is the standard contract fair and/or full for Tim? How does purchasing the standard contract affect Tim’s expected income?c. Jay has IH =$1, 000 and IS =$0, with probability of illness p=0.2. Is the standard contract fair and/or full for Jay?d. Suppose there is a customer named Ronald for whom the standard contract is partial and actuarially unfair in the insurance company’s favor. Give a set of possible values for Ronald’s IH, IS,…
- Suppose a municipality were considering a ban on sugary soft drinks. They estimate that 20% of the obesity in the city can be attributed to sugary soft drinks, and thus the ban would be expected to reduce obesity by 20%, citywide. Which measure corresponds to '20%? a. Odds ratio b. Population attributable proportion c. Cumulative incidence d. Relative risk e. Risk difference f. Attributable risk among the exposedQUESTION 13 The size of the uninsured and underinsured population in the United States has become an indication of the access problems in the US healthcare system.TrueFalse QUESTION 14 If the expected age of death for a male aged 20 is 75, then a 20-year-old man who dies is considered to have lost how many years of life? A. 20 years of life B. 75 years of life C. 55 years of life D. None of these QUESTION 15 Why is survival time considered to be a good indicator of health status? A. It measures health outcomes as compared to costs B. It places an emphasis on the time spent(duration) in a specific health state C. The measure accounts for mortality rates D. It measures outcomes or health state at a given point in time6.33 Statistics released by the National HighwayTraffic Safety Administration and the National SafetyCouncil show that on an average weekend night, 1 outof every 10 drivers on the road is drunk. If 400 driversare randomly checked next Saturday night, what is theprobability that the number of drunk drivers will be(a) less than 32?(b) more than 49?(c) at least 35 but less than 47?