Question

CHI SQUARE PROBLEM

Forks Pharmaceuticals has developed a new drug to cure cancer. They have run 1000 trials. See below.

Drug                                                      Placebo

Recovery                                            300                                                         200

No Recovery                                      250                                                         ________ fill this in!

a.       Calculate Chi Square and use the .01 significance level. Are the taking of the drug and recovery independent of each other?

1. Based on these results what is the chance of recovery if the drug is taken vs. the chance for recovery if it is not?

b. If the drug costs $1,000 a dose for each person given, what is the total NET cost to administer the program if the people healed as a result of taking the drug represent a benefit to society of $4,000 which is counted against the total cost? Based on this alone is the full development of the drug worth it?

Answer 1