The Following Problem Is Frequently Encountered in the Case of a Rare

question 37

Essay

The following problem is frequently encountered in the case of a rare disease, say AIDS, when determining the probability of actually having the disease after testing positively for HIV. (This is often known as the accuracy of the test given that you have the disease.) Let us set up the problem as follows: $Y = 0$ if you tested negative using the ELISA test for HIV, $Y = 1$ if you tested positive; $X = 1$ if you have HIV, $X = 0$ if you do not have HIV. Assume that $0.1$ percent of the population has HIV and that the accuracy of the test is $0.95$ in both cases of (i) testing positive when you have HIV, and (ii) testing negative when you do not have HIV. (The actual ELISA test is actually $99.7$ percent accurate when you have HIV, and $98.5$ percent accurate when you do not have HIV.) (a)Assuming arbitrarily a population of 10,000,000 people, use the accompanying table to
first enter the column totals. $$\begin{array} { | r | l | l | l | } \hline & \text { Test Positive } ( Y = 1 ) & \text { Test Negative } ( Y = 0 ) & \text { Total } \\\hline \text { HIV } ( X = 1 ) & & & \\\hline \text { No HIV } ( X = 0 ) & & & \\\hline \text { Total } & & & 10,000,000 \\\hline\end{array}$$

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Definitions:

Economic Growth

An increase in a country's output of goods and services over time, typically measured by changes in real GDP, indicating improvements in living standards and economic health.

Capital

Assets or resources that are available for use in the production of further assets or goods.

Entrepreneurial Ability

The skill or capacity to identify opportunities, create new businesses, and innovate new products or services in the marketplace.

Opportunity Cost

represents the value of the next best alternative forgone as a result of making a decision.