The government wants to make Medicare benefits available to more people, but to

Question

The government wants to make Medicare benefits available to more people, but to achieve this goal, it needs to make cuts in the existing Medicare budget. The two areas where they are considering cuts are non-essential elective surgery and 6-12 month mental health care programs. Applying the concepts of diminishing marginal utility, the budget cuts should be made for spending on:

Elective surgery due to its lower marginal return rates

Mental health therapy due to its higher marginal return rate

Both programs, which have the same marginal return rate

Neither can be compared by measuring marginal utility

Explanation / Answer

Elective surgery due to its lower marginal return rates

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