1. Consider two treatments A and B that have the following costs and benefits

Treatment A: cost = 200,000benefit=10 life years

Treatment B: cost = 20,000 benefit=9 life years

a. Calculate the average cost effectiveness ratios

b. Calculate the incremental cost effectiveness ratio

c. Are both treatments cost effective? Why or why not?

2.An intervention has the following cost and benefit profile:

Baseline cost = 400,000 Range: 200,000 - 1,200,000

Baseline benefit= 10 life yrs Range 5 - 20

a. Calculate the cost effectiveness ratio

b. Perform a sensitivity analysis.

c. If the cost effectiveness cutoff is 100,000/life yr, when is the intervention not cost effective? What if the cutoff is $50,000 per life yr?