cea_practice_problems

cea_practice_problems - PRACTICE PROBLEMS 1 You have the...

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PRACTICE PROBLEMS 1. You have the following table of costs and benefits for alternative treatments Treatment # Cost Effectiveness (life years gained) 1 100000 5 2 200000 3 3 400000 10 4 500000 20 A. Which treatment(s) if any, is strongly dominated? 2 is strongly dominated B. Which treatment(s) if any is weakly dominated? 3 is weakly dominated C. Calculate incremental cost effectiveness ratio. (500000-100000)(20-5) = 400000/15 = 26,667 D. Assuming that a life year is considered to be worth up to 100000, which interventions would you choose, in the absence of budgetary constraints? Choose 4 E. How might budgetary constraints affect your decision on which interventions to choose? You might not be able to choose 4 even though it is cost effective 1

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2. Consider the following costs and benefits associated with two treatments, A and B. Costs and benefits are in dollars Costs Treatment Yr 1 Yr2 Yr3 A 100 700 400 B 400 300 200 Benefits Treatment Yr 1 Yr2 Yr3 A 300 400 900 B 500 600 100 A. Assuming a discount rate of 5% and no discounting applied in Yr 1, calculate the present value of net benefits for each treatment.
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