Consider the following screening test for cancer applied to 100,000 people of whom 100 have cancer. Each test costs $6.50, picks up 75% of cancer cases., and additionally, 12% of the time, falsely diagnoses cancer. Detection of cancer (rightly or wrongly) leads to a further exact diagnostic test that costs $100. Correct early detection of cancer by the test is valued at $10,000 What is the marginal benefit of doing the test? What are the marginal costs of doing the test
Consider the following screening test for cancer applied to 100,000 people of whom 100 have cancer. Each test costs $6.50, picks up 75% of cancer cases., and additionally, 12% of the time, falsely diagnoses cancer. Detection of cancer (rightly or wrongly) leads to a further exact diagnostic test that costs $100. Correct early detection of cancer by the test is valued at $10,000 What is the marginal benefit of doing the test? What are the marginal costs of doing the test
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter17: Making Decisions With Uncertainty
Section: Chapter Questions
Problem 17.2IP
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Consider the following screening test for cancer applied to 100,000 people of whom 100 have cancer. Each test costs $6.50, picks up 75% of cancer cases., and additionally, 12% of the time, falsely diagnoses cancer. Detection of cancer (rightly or wrongly) leads to a further exact diagnostic test that costs $100. Correct early detection of cancer by the test is valued at $10,000
What is the marginal benefit of doing the test?
What are the marginal costs of doing the test
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