Economics Calculations

Incremental Cost = (change in Price/change in Volume or Size) Example: 16 oz Soda cost 89 cents and 24 oz costs 99 cents, what is the incremental cost? (99-89) / (24-16) or 1.24 cents per oz Note: It is the cost of producing an additional unit Calculating Inflation Adjusted Values Example: Healthcare spending in 2006 was $7026 and in 1997 $4104, CPI rose from 152.4 to 201.6. To express in 1997 adjusted terms: ($4104 x 201.6) / 152.4 = $5,429 Expected Value = Value of Outcome x Probability of Occurrence + Resulting Products Example: 120,000 x 0.60 = 72,000 20,000 x 0.40 = 8,000 $80,000 Expected Value Variance Standard Deviation = (Value of Each Outcome Expected Value)2 X Probability; then add products = square root of variance

Income Elasticity = Percentage of change in Demand or Ey=(dQ/Q)/(dY/Y) Percentage of change in Income *can be positive or negative Price Elasticity = Percentage of change in Demand or Ep=(dQ/Q)/(dY/Y) Percentage of change in Price
*usually negative

Price Elasticity and Market Share Example: price elasticity for admissions is -0.17 and you have 12% of market share -0.17/0.12 or -1.42 Note: the greater the market share, the larger the market elasticity (i.e, you own more of the market so you can set
prices where you want.)

Cross Price Elasticity

= Percentage of change in Demand or ER=(dQ/Q)/(dR/R) R is the cost of the relative product

Percentage of change in Price of Complement or Substitute Example: Given the cross price elasticity -0.18 & percentage change in income of 0.5, what is the demand? -0.18 = X solve for x: -0.18 x 0.05 =x 0.5 -0.9% or -.009 = x

Arc Elasticity Profit

= uses the averages of the numbers instead of the actual numbers

= MC x [e/(1+e)] MC is marginal cost; e is elasticity Example: MC = $10 and price elasticity is -6.4 what is the profit? P= 10 x [-6.4/(1-6.4)] or $11.85 To Solve for Marginal Cost MC = Profit x (1+e) / e

Managerial Epidemiology Calculations

Rate = # of cases with disease/condition # of individuals in population during specified time
Note: may be expressed as a percentage or a numbers per 1,000 or per 100,000

Incidence Rate = # of new cases Total # of individuals at risk

Note: measures the frequency of morbidity; is a result of a cohort study

Prevalence Rate

= # of existing cases Total # of individuals

or

Incidence Rate x Average Duration of Disease

Example: 1500 individuals have B/P readings, of those screened, 150 individuals diagnosed with HTN. 150/1500 or 10%

Point Prevalence = # of persons with condition (new and existing) Total # of individuals in population during specified time Mortality Rate or Crude Death Rate = Total # of Deaths Total # of Individuals in Population

Relative Risk

= Incident Rate Among Exposed Incidence Rate Among Unexposed

Note: measures the magnitude by which the probability is increased in individuals exposed to a risk factor; measures association in prospective studies.

Calculations of Relative Risk Risk Factor Exposed Nonexposed

Disease a c a+c =(a/a+b)/(c/c+d)

No Disease b d b+d

Totals

Example: Incidence of liver dysfunction in alcohol drinkers is 125 cases per 100,000 and incidence rate in nondrinkers is 10 cases per 100,000. Relative Risk is 125/10 or 12.5, meaning that alcohol drinkers are 12.5 times more likely to develop liver dysfunction.

Odds Ratio

= ad bc = # of observed # of expected using a rate standard in population

Risk Adjusted Rate

Sensitivity = a/(a+c) *I have a condition, so I test positive * the closer the result is to 1, the more accurate the test Specificity = d/(b+d) * I don t have the condition, so I test negative Positive Predictive Value = a/a+b * there is a possibility that I do have the disease Negative Predictive Value = d/(c+d) *test negative therefore, I don t have the disease Likelihood Ratio of Positive Test (LR+) =sensitivity/1-specificity Likelihood Ratio of Negative Test (LR-) = (1-sensitivity)/(1-specificity)
Likelihood Ratio is the probability of a test result in the presence of disease divided by the probability of that same test result in the absence of disease