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…

Answered: Estimate total direct costs in year 1…

Business

Economics

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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