Let us assume that the incidence of a disease is two individuals per year. The direct costs perperson per year, including the cost of the patient's time, are 5,000 m.u. annual morbiditycosts are 4,000 m.u, and annual costs due to productivity losses are 10,000 m.u. All theprevious monetary values refer to year 1.The life expectancy of a person who has contracted the illness is 4 years. Therefore, a personwho contracts the illness at the beginning of this year (year 1) will survive until the end of year4 and will die at the beginning of year 5. On the other hand, every year 8 individuals will havethis iness and the annual mortality will be of 2 individuals (who caught the disease 4 yearsagol. Premature death due to the liness represents a loss of 5 life years per individual. Thediscount rate is 4%Estimate total direct costs in year 1 using the prevalence approach.Select oneOa Total direct costs using the prevalence approach cannot be estimated with theInformation provided in this question.Db 40,000 m.uOc 10,000 m.u.Od 20,000 ma

The prevalence approach is a method for calculating the economic effect of an illness by accounting…

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Estimate total direct costs in year 1 using the prevalence approach.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Let us assume that the incidence of a disease is two individuals per year. The direct costs per
person per year, including the cost of the patient's time, are 5,000 m.u. annual morbidity
costs are 4,000 m.u, and annual costs due to productivity losses are 10,000 m.u. All the
previous monetary values refer to year 1.
The life expectancy of a person who has contracted the illness is 4 years. Therefore, a person
who contracts the illness at the beginning of this year (year 1) will survive until the end of year
4 and will die at the beginning of year 5. On the other hand, every year 8 individuals will have
this iness and the annual mortality will be of 2 individuals (who caught the disease 4 years
agol. Premature death due to the liness represents a loss of 5 life years per individual. The
discount rate is 4%
Estimate total direct costs in year 1 using the prevalence approach.
Select one
Oa Total direct costs using the prevalence approach cannot be estimated with the
Information provided in this question.
Db 40,000 m.u
Oc 10,000 m.u.
Od 20,000 ma

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