Reference no: EM132203014

Assignment -

Review the attached PowerPoint lesson for Assignments.

Questions:

1. We have learned that production efficiency is achieved when society is receiving the maximum amount of output from its limited resources. Explain how cost-benefit analysis can be used to achieve that outcome.

2. You have just been hired by your city's department of health. Your first task is to use cost benefit analysis to evaluate a smoking awareness program that the department has been promoting for two years. Under the smoking awareness program, the department of health sends a team of health care professionals to various private firms free of charge to lecture to employees about the risks of smoking. The lecture takes one hour and is given during the workday. Describe the costs and benefits you should consider in your analysis.

3. In your own words, describe the difference between cost-benefit and cost effectiveness analysis.

4. According to Lee et al. (2009), the incremental cost-effectiveness ratio comparing the current dialysis treatment to the next least cost dialysis treatment is $61,294 per life year and $129,090 per QALY. Can you account for the different estimates?

5. According to estimates, between 60 and 70 percent of smokers who enter a hospital for an acute myocardial infarction (a heart attack) continue to smoke after being discharged from the hospital. Needless to say, those individuals are at high risk for a recurrent heart attack, stroke, and even death after they leave the hospital. Ladapo et al. (2011) study whether it is economically viable to implement a smoking cessation counseling program with follow-up contact after discharge for those individuals who continue to smoke. According to their estimates the cost effectiveness of a smoking cessation counseling program is $5,050 per QALY. Should per the program be implemented? Why?

6. The commissioner of health is concerned about the increasing number of reported cases of preventable childhood diseases, such as polio and rubella. It appears that a growing number 12 BUS508 - Economics of Health and Medical Care Course Syllabus of young children are not being vaccinated against childhood diseases as they should be. Two proposals to address the problem are sitting on the commissioner's desk. The programs have equal costs, but the commissioner has funding for only one. The first proposal involves providing free vaccinations at clinics around the country. The benefits from a free vaccination program are likely to be experienced immediately in terms of a drop in the number of reported cases of illness. The second program calls for educating young married couples about the benefits of vaccination. The benefits in this instance will not be felt for some years. The commissioner wants to use cost-benefit analysis to determine which proposal should be implemented. Explain to the commissioner the critical role the discount rate plays in determining which program is chosen. In particular, which program is more likely to be chosen if a relatively low discount rate is selected? Why? Commissioner the critical role the discount rate plays in determining which program is chosen. In particular, which program is more likely to be chosen if a relatively low discount rate is selected? Why?

7. Distinguish between the human capital and willingness-to-pay approaches for determining the value of a life. Why does the willingness-to-pay approach generally estimate the value of a life to be higher than the human capital approach does?

8. Read the following passage from an article in the Wall Street Journal (October 3, 1995, p. B1) and answer the following questions. Diabetic Toby Warbet quit her secretarial job last year because of physical problems, including blurred vision and a general loss of sensation. Such was her desperation that when she heard about an unproven treatment that might help her, she decided to borrow $20,000 from relatives to pay for it.... "Even if the chances are one in a million, I was hoping I would be the one," says the Livingston, NJ resident.

a. Use the human capital approach to provide a monetary estimate of the value of Toby Warbet's life as of October 3, 1995. Explain.

b. Use the willingness-to-pay approach to estimate the value of Toby Warbet's life. Explain.

c. Provide a reason for the discrepancy between the two approaches.

d. How might you measure the value of Toby Warbet's life using the human capital approach and attain a figure close to the willingness-to-pay approach?

Attachment:- Assignment File.rar