Given Incremental Cost 5, Incremental Effect 1, WTP 3, what is the Net Monetary Benefit (NMB)?

Given Incremental Cost 5, Incremental Effect 1, WTP 3, what is the Net Monetary Benefit (NMB)?

• A. -5
• B. 0
• C. -1
• D. -2

Answer: (D)

Net Monetary Benefit is found by valuing the health gain at the given willingness to pay and subtracting the extra cost. Here, the health gain is 1 unit and each unit is worth 3, so the benefit value is 3. Subtract the incremental cost of 5, and NMB = 3 − 5 = −2. A negative NMB means this option isn’t cost-effective at the stated WTP. The other numbers would require different balances (for example, a benefit value of 5 would yield zero, or more than 5 would yield a positive NMB), but with the given values the correct NMB is −2.

Net Monetary Benefit is found by valuing the health gain at the given willingness to pay and subtracting the extra cost. Here, the health gain is 1 unit and each unit is worth 3, so the benefit value is 3. Subtract the incremental cost of 5, and NMB = 3 − 5 = −2. A negative NMB means this option isn’t cost-effective at the stated WTP. The other numbers would require different balances (for example, a benefit value of 5 would yield zero, or more than 5 would yield a positive NMB), but with the given values the correct NMB is −2.