Preventive care is not always cost-effective. Suppose that it costs $200 per per

Question

Preventive care is not always cost-effective. Suppose that it costs $200 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 $2,000 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 12 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 6 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

When the screening test is provied to 100 people and the test is costing $200 per person then it will cost $20,000 to provide for those 100 tests. Hence the answer is $20,000. It the test is able to discover a disease, then it saves $2,000. Now 12 percent of those receiving the screening exam test positive implies 12 people since total 100 people were tested. This will save a total $24,000 in future costly treatments will be averted  Hence the answer is $24,000 As much as $4,000 is saved by setting up a screening system Hence the answer is $4,000 It the test is able to discover a disease, then it saves $2,000. Now 6 percent of those receiving the screening exam test positive implies 6 people since total 100 people were tested. This will save a total $12,000 in future costly treatments will be averted.  Hence the answer is $12,000 A total of $8,000 is lost by setting up a screening system since the future savings fall short of the cost incurred. Here the answer is $8,000

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