This figure describes the outcomes of two treatment alternatives for chronic obstructive pulmonary disease. Suppose that A is the standard alternative and B is the new one. Additionally, cost of alternative A is $ 15,000 and cost of alternative B is $ 50,000. Answer The questions according the graph below. How many QALYS are gained with therapy A? 0.9 0.8 A 0.7 Years of life saved 4 6 elect one: a.8.5 b.4.8 c.3.8 d.5.2 Utility weight

This figure describes the outcomes of two treatment alternatives for chronic obstructive pulmonary disease. Suppose that A is the standard alternative and B is the new one. Additionally, cost of alternative A is $ 15,000 and cost of alternative B is $ 50,000. Answer The questions according the graph below. How many QALYS are gained with therapy A? 0.9 0.8 A 0.7 Years of life saved 4 6 elect one: a.8.5 b.4.8 c.3.8 d.5.2 Utility weight

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter20: The Problem Of Adverse Selection Moral Hazard

Section: Chapter Questions

Problem 3MC

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A health economist is conducting the analysis and making a choice between the following two choices: Choice A: there is a certain outcome that the patient will stay in chronic health state X for the rest of his life T Choice B: the treatment has two possible outcomes, either the patient is returned to full Health (1) of the rest of his life T with probability p; the patient dies (0) immediately with the remainig probability What is the utilty value of the health state X? X=P X=PT X=(1-P)/P X=PT/(1-P)
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.
If 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.-What is the QALY? Answer in not less than 300 words
Lela must decide to go on a winter trip to norway with the hope of seeing northern light would yield a utility level of 2,000 but she has only a 50% chance that they will show during the days of her trip. making the trip without seeing the lights would yield a utility level of 100 and there is 50 % chance of this happening. what is lela's expected utilty if show goes on the trip? a. 2,100 b.1,050 c.42 d.950
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
[A] Suppose that a drug company has developed an ointment that can be used to treat sores and reduce scarring. Surveys indicated that the ointment, which costs $10,000 for a full course of treatment, can improve the quality of life from 0.6 to 0.7 for patients with this problem. Assume that this population has a life expectancy of 70 years. No need to worry about discounting. 1. What is the Incremental Cost-Utility Ratio (ICUR) for taking the ointment over doing nothing for a typical 20-year-old patient? [Hint: This patient has only 50 years of life remaining.] 2. If the cost-effectiveness threshold is $5,000 per QALYS, will the 20-year-old patient choose to get the ointment? What about a 60-year-old patient? [B] Is it appropriate to evaluate a healthcare intervention using various methods of economic evaluation as discussed in this course, or should we choose one primary method that best fits the analysis?
A researcher studying the effects of a new fertilizer on crop yields plansto carry out an experiment in which different amounts of the fertilizerare applied to 100 different 1-acre parcels of land. There will be fourtreatment levels. Treatment level 1 is no fertilizer, treatment level 2 is50% of the manufacturer’s recommended amount of fertilizer, treatmentlevel 3 is 100%, and treatment level 4 is 150%. The researcher plans toapply treatment level 1 to the first 25 parcels of land, treatment level 2to the second 25 parcels, and so forth. Can you suggest a better way toassign treatment levels? Why is your proposal better than the researcher’smethod?
The owner of a ski resort is considering installing a new ski lift that will cost $900,000. Expenses for operating andmaintaining the lift are estimated to be $1,500 per day when operating. The U.S. Weather Service estimates thatthere is a 60% probability of 80 days of skiing weather per year, a 30% probability of 100 days per year, and a 10% probability of 120 days per year. The operators of the resort estimate that during the first 80 days of adequate snow in a season, an average of 500 people will use the lift each day, at a fee of $10 each. If 20 additional days are available, the lift will be used by only 400 people per day during the extra period; and if 20 more days of skiing are available, only 300 people per day will use the lift during those days. The owners wish to recover any invested capital within five years and want at least a 25% per year rate of return before taxes. Based on a before-tax analysis, should the lift be installed?
Assume that there are two parties, I and V. I engages in an activity that tends to injure V. V and I both can take care to reduce the expected harm from accidents. Specifically, suppose that if I takes no care (i.e., spends $0 on accident precautions), expected injury to V is $250. If I spends $40 on accident precautions, however, the expected injury to V is reduced to $175. Further suppose that V has a choice between taking no care or spending $50 in care to avoid accidents. If V spends $50 in care, V’s expected harm falls by $20 regardless of the level of care that I takes. Assume that courts adopt the socially‐optimal level of injurer care as the negligence standard. That is, if I takes less than the socially‐optimal level of care, she will be found negligent and must pay for all damages to V. If I takes at least the socially optimal level of care, she will not have to compensate V for his damages. 1. Under a negligence standard, what is I’s dominant strategy? a) I does not have a…
Assume that there are two parties, I and V. I engages in an activity that tends to injure V. V and I both can take care to reduce the expected harm from accidents. Specifically, suppose that if I takes no care (i.e., spends $0 on accident precautions), expected injury to V is $25. If I spends $5 on accident precautions, however, the expected injury to V is reduced to $18. Further suppose that V has a choice between taking no care or spending $4 in care to avoid accidents. If V spends $4 in care, V’s expected harm falls by $2 regardless of the level of care that I takes. Assume that courts adopt the socially-optimal level of injurer care as the negligence standard. That is, if I takes less than the socially-optimal level of care, she will be found negligent and must pay for all damages to V. If I takes at least the socially optimal level of care, she will not have to compensate V for his damages. What is the Nash equilibrium of this game under a rule of no liability? Question…
a. If the decision maker knows nothing about the probabilities of the fourstates of nature, what is the recommended decision using:i. the optimistic approachii. the conservative approachiii. the minimax regret approachiv. the Laplace method
You live in an area that has a possibility of incurring a massive earthquake, so you are considering buyingearthquake insurance on your home at an annual cost of $180. The probability of an earthquake damagingyour home during one year is 0.001. If this happens, you estimate that the cost of the damage (fully coveredby earthquake insurance) will be $160,000. Your total assets (including your home) are worth $250,000.