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# mt2af07ans - Econ 132 Fall 2007 SECOND MIDTERM EXAM(A...

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Unformatted text preview: Econ 132 Fall 2007 SECOND MIDTERM EXAM (A): SOLUTIONS Cameron Version A 1.(a) Net cost = \$2,500 - \$700 - \$900 = \$900. LY’s saved = 0.2 and QALY adjustment factor = 0.9, so QALY’s saved = 0.2 x 0.9 = 0.18. Costs per QALY saved = \$900 / 0.18 = \$5,000. This is relatively low, so use Simvastatin. (b) Cost = \$2,500 < Benefit = \$700 + \$900 + 0.2 x 0.9 x \$50,000 = \$1,600 + \$9,000 = \$10,600. [Or continue with part (a): Net cost = \$900 less than benefit = 0.2 x 0.9 x \$50,000 = \$9,000]. Benefit exceeds cost. So use Simvastatin. (c) There are several ways to proceed. If we do analysis per 1000 people tested cases then there are 100 people with cancer and 900 without, yielding 0.9*100=90 true positives and 0.02x900 = 18 false positives. Cost = \$5000+(90+18)x\$1,000 = \$113,000 for 90 true cases or \$113,000/90 = \$1,255 per true case. [You can also suppose that the 2% false positive is of 1000 yielding 20 false positives. Then Cost = \$5000+(90+20)x\$1,000 = \$115,000 for 90 true cases or \$115,000/90 = \$1,278 per true case]...
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mt2af07ans - Econ 132 Fall 2007 SECOND MIDTERM EXAM(A...

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