Question

1. The table below represents the costs and benefits of four alternative programs designed to treat a life-threatening disease that afflicts all people over the age of 18 (children are immune to the disease).                                                                                                      

Program	Costs($)	Life Saved	Cost-Effectiveness Ratio
A	100,000	10
B	100,000	12
C	200,000	12
D	200,000	15

1. Fill in the cost effectiveness ratio (average cost per life saved) column of the table. In terms of the cost-effectiveness ratio, state which program is the best and briefly explain why? Hint: Your answer should be very specific.

Now suppose that program B is targeted at saving the lives of senior citizens (aged 65 and older), while program C is targeted at saving the lives of young adults (aged 18-30). Ignore alternatives A and D for question (b).

2. In this scenario, provide an economic argument in support of choosing program C over program B? Briefly explain your answer. Be sure to use economic reasoning rather than morals or emotion and be specific.

Answer 1

A)

PROGRAM COST(S) LIFE SAVED COST-EFFECTIVENESS Ratio

A 1,00,000 10 10,000

B 1,00,000 12 8,333.33

C 2,00,000 12 16,666.67

D 2,00,000 15 13,333.33

Cost effectiveness ratio of Program B is minimum. Program B saved more lifes at lower cost. Hence Program B is Best. Cost effectiveness ratio of Program C is maximum. Program C has high cost per life saved in comparision of other program. hence Program D is worst.

B) Program B is targeted at saving the lives of senior citizens (aged 65 and older), while program C is targeted at saving the lives of young adults (aged 18-30).

Aged 18-30 has good immunity system in comparision of senior citizens.Due to good immunity system chances of recovery is high. Cost effectiveness of Program C is worst in comparision of Program B.But due to good immunity system of person targeted by Program C we support to choose Program C over Program B.