A team of doctors is considering different treatments for a particular disease. Four alternatives are on the table: (i) A, (ii) B, (iii) C, and (iv) D. The doctor leading the team has identified four relevant attributes for the decision: Speed of cure, pain relief, and availability. She has estimated associated costs for each treatment, and allocated weights of 30 to speed of cure, 60 to pain relief, and 10 to availability. She then rated the performance of each form of treatment on the different attributes. The values she assigned are shown below together with the estimated costs.
|Speed of cure||100||0||60||70|
|Costs ($)||150 000||90 000||40 000||70 000|
a) Determine the form of treatment that has the highest valued overall benefits.
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b) For each treatment, plot the value of overall benefits against costs (in reverse order) and hence identify the treatments that lie on the efficient frontier.
c) If the she would be prepared to pay $70 000 per year to move from worst pain relief to best pain relief (all else remaining equal), determine which alternative she should select.