A Laboratory Test for a Disease Affecting 5% of the Population

question 92

Short Answer

A laboratory test for a disease affecting 5% of the population is either positive, indicating the disease is present, or negative, indicating the disease is not present. When people having the disease are tested, 80% of the tests come back positive, and when people who don't have the disease are tested, 15% of the tests come back from the lab marked positive (a false positive result). What is the chance a randomly chosen person's test results would come back positive?
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Definitions:

Price Ceiling

A legal limit on how high the price of a product can be charged in the market.

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service and the actual amount they do pay.

Producer Surplus

The difference between the amount producers are willing to sell a good for and the actual amount they receive by selling it at the market price.

Market Equilibrium

The point at which the quantity demanded and the quantity supplied of a product are equal, leading to a stable market price.