Suppose That a Year of Life Is Worth $100,000, and That

question 1

Multiple Choice

Suppose that a year of life is worth $100,000, and that the cost of a new treatment for HIV is $30,000 per year, and that it increases the life expectancy by 3 years. If the discount rate is 3 percent, is the HIV treatment worth the cost to a 30-year-old male who expects to live for 2 more years without treatment.

• A) No, since the present value of costs are greater than the present value of benefits.
• B) Yes, since the present value of benefits are greater than the present value of costs.
• C) Yes, since the present value of benefits are equal to the present value of costs.
• D) Not enough information is provided to make a determination.

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Definitions:

ECT

Electroconvulsive Therapy, a psychiatric treatment in which seizures are electrically induced in patients to provide relief from severe mental disorders.

Muscle Relaxants

Medications used to relieve muscle spasms and discomfort.

Oxygen

A chemical element vital to most forms of life on Earth, necessary for respiration and energy production in cells.

MAO Inhibitors

Medications that treat depression by preventing the breakdown of certain neurotransmitters in the brain.