Pre-Class Work

1.The table below represents the costs and benefits of four alternative programs designed to treat a life-threatening disease that afflicts all people over the age of 18 (children are immune to the disease).

Program

Costs($)

Life Saved

Cost-Effectiveness Ratio

A

100,000

10

B

100,000

12

C

200,000

12

D

200,000

15

a.Fill in the cost effectiveness ratio (average cost per life saved) column of the table. In terms of the cost-effectiveness ratio, state which program is the best and briefly explain why? Hint: Your answer should be very specific.

Now suppose that program B is targeted at saving the lives of senior citizens (aged 65 and older), while program C is targeted at saving the lives of young adults (aged 18-30). Ignore alternatives A and D for question (b).

b.In this scenario, provide an economic argument in support of choosing program C over program B? Briefly explain your answer. Be sure to use economic reasoning rather than morals or emotion and be specific.