The cost of all of the interventions for one life-year mentioned in box 4-1 is totaled as 1,697,775 dollars (Tengs). This presents the issue of how to formulate a rule to optimize the amount of lives saved, given this number. One would go about doing this by factoring in which of these interventions requires the most immediate financial attention, and which ones can afford to be funded less than others. In order to save the most lives in a fixed budget one would have to decrease funding for mammograms, as well as for home random control. These are important needs, however when weighed with the other interventions they are the lesser important ones. This would be able to help the ratio that the society puts their budget into the specific interventions to be well rounded, without more money going to programs that don’t need it. In order for such a program to succeed the society undertaking such an endeavor should be made a priority, and the necessity of each intervention should be capitalized upon in order to save as much of the budget as possible.

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When the price for apples is 10 dollars and 100 apples are being sold, the market is efficient. However, if the number of apples sold is 90 due to the licensing, then the consumer surplus goes down because when the supply is limited, the price will rise as well. This also means that the producer surplus goes up because consumers aren’t buying due to the increase in price. Unfortunately, this also means that since there are less apples being sold, and those that are, are being done so at a higher price, the consumer wellbeing will go down because they will not be able to buy as many apples, because of the decrease in supply, and when they do, the apples will be more expensive. This is not beneficial to the consumer because they have decreased access and increased price. This shows that there is a direct correlation between the licensing limiting the number of apples sold to 90, and a decrease in overall customer wellbeing due to the change in the number of apples. This shows that when the supply decreases due to a licensing of a product, the price goes up, and consumer satisfaction goes down.

References

  • Tengs, Tammy O., et al. “five-Hundred Life-Saving Interventions and Their Cost-Effectiveness,” Risk Analysis 15 (1995): 369-384, with permission of the publisher.