Suppose That the Cost of a New Treatment for HIV

question 27

Multiple Choice

Suppose that the cost of a new treatment for HIV is $20,000 per year, and that it increases the life expectancy by 5 years. If the discount rate is 4 percent, what is the present value of the costs of treatment to a 40-year-old male who has a life expectancy of 45 years without treatment.

• A) $96,153.85
• B) $85,155.50
• C) $73,181.47
• D) $100,000

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Definitions:

Quantity Supplied

The total amount of a good or service that producers are willing to sell at a given price over a specific period.

Quantity Demanded

The amount of a good or service that consumers are willing and able to purchase at a given price.

Demand Schedule

A table that shows the quantity of a good or service that consumers are willing and able to purchase at different prices.

Equilibrium Price

The price at which the quantity of a good or service demanded equals the quantity supplied, resulting in market balance.