Questions: Suppose the president is attempting to decide whether the federal government should spend more on research to find a cure for heart disease. What is the opportunity cost of spending more money to find a cure for heart disease? A. The reduction in funding for research to cure other diseases. B. The reduction in future health-related costs of heart disease. C. The cost of the Medicare/Medicaid program. D. The monetary value of a human life. E. The total explicit cost of the research to cure heart disease. How should policymakers determine the amount of money that should be allocated for research curing heart disease? They should base their decision on A. the value of the total benefit of research on curing other diseases. B. whether the last dollar devoted to research on heart disease results in more benefit than the last dollar spent on research for curing other diseases. C. the number of people who die from heart disease compared to the number of people who die from other diseases. D. the value of the total benefit of the research on heart disease. E. the number of people who have heart disease compared to the number of people who have other diseases.

The answer is A: The reduction in funding for research to cure other diseases.

Explanation for Each Option:

A. The reduction in funding for research to cure other diseases.

• Correct. Opportunity cost refers to the value of the next best alternative that must be forgone when a choice is made. In this case, if more money is allocated to heart disease research, less money will be available for other research areas, such as cancer or diabetes.

B. The reduction in future health-related costs of heart disease.

• Incorrect. This is a potential benefit of spending more on heart disease research, not an opportunity cost.

C. The cost of the Medicare/Medicaid program.

• Incorrect. This is a separate budgetary concern and not directly related to the opportunity cost of allocating funds to heart disease research.

D. The monetary value of a human life.

• Incorrect. While the value of human life is a significant consideration, it is not the opportunity cost in this context.

E. The total explicit cost of the research to cure heart disease.

• Incorrect. This represents the direct cost of the research, not the opportunity cost, which is about what is sacrificed by choosing this option over another.

The answer is B: whether the last dollar devoted to research on heart disease results in more benefit than the last dollar spent on research for curing other diseases.

Explanation for Each Option:

A. The value of the total benefit of research on curing other diseases.

• Incorrect. While this is important, policymakers need to consider the marginal benefit of the last dollar spent, not just the total benefit.

B. Whether the last dollar devoted to research on heart disease results in more benefit than the last dollar spent on research for curing other diseases.

• Correct. This approach is based on the principle of marginal analysis, which helps in determining the most efficient allocation of resources by comparing the additional benefits of different spending options.

C. The number of people who die from heart disease compared to the number of people who die from other diseases.

• Incorrect. While this information is relevant, it does not directly address the marginal benefit of the last dollar spent.

D. The value of the total benefit of the research on heart disease.

• Incorrect. Total benefit is important, but the decision should be based on the marginal benefit of the last dollar spent.

E. The number of people who have heart disease compared to the number of people who have other diseases.

• Incorrect. This is a factor to consider, but it does not address the marginal benefit of the last dollar spent.

By focusing on the marginal benefit, policymakers can ensure that resources are allocated in a way that maximizes overall societal benefit.