The concept of opportunity cost is critical to understanding the basic economic problem. Because there is scarcity a choice has to be made on how to allocate scarce resources. The cost of that choice is 'the next best opportunity forgone' - the opportunity cost.
Britain's National Health Service (NHS) is a universal health service scheme, free at the point of use. It is comprehensive and includes dental, optical, physio etc. Very few Britons have or need private health insurance. (Around 11.7% of the population had private health insurance in 2010, with about half being provided this by their employer as part of a package. The figure for Australia is 54.7% in 2013.)
The NHS is therefore funded by the government from tax revenue. Of course it is very expensive and the NHS budget competes with all the other things government spends money on, such as pensions, defence and education.
The government must decide how much to spend on health. If the spend more on health they can spend less on education for example. Then the NHS must decide how to allocate their budget between uses. More on cancer treatments might mean less on hip-replacements for example.
The NHS is 'the envy of the world' according to many. However in the UK it is a constant struggle to fund it and illustrates the concept of opportunity cost every day. The attached article shows one example of opportunity cost.
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