Preventive care is not always cost-effective. Suppose that it costs $50 per pers

Question

Preventive care is not always cost-effective. Suppose that it costs $50 per person to administer a screening exam for a particular disease. Also suppose that if the screening exam finds the disease, the early detection given by the exam will avert $500 of costly future treatment. Instructions: Enter your answers as whole numbers. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. a. Imagine giving the screening test to 100 people. How much will it cost to give those 100 tests? $. Imagine a case in which 20 percent of those receiving the screening exam test positive. How much in future costly treatments will be averted? $. How much is saved by setting up a screening system? $. b. Imagine that everything is the same as in part a except that now only 7 percent of those receiving the screening exam test positive. In this case, how much in future costly treatments will be averted? $. How much is lost by setting up a screening system?

Explanation / Answer

a. Total cost of 100 tests = 100 X $ 50 = $ 5,000

If 20% of secreening exam test is positive, it means future cost of treatment = 20 X $ 500 = $ 10,000

Saving = 80 X $ 50 = $ 4,000

b. Future cost of treatment = 7% of 100 X $ 500 = 7 X $ 500 = $ 3,500

Money lost = $ 3,500 - 7 X $ 50 = $ 3,500 - $ 350 = $ 3,150

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