Question

Need help with A. and B.

Decision Making by Individuals and Firms-End of Chapter Problem 8. The Centers for Disease Control and Prevention (CDC) recommended against vaccinating the whole population against the smallpox virus because the vaccination has undesirable, and sometimes fatal, side effects. Suppose the accompanying table gives the data that are available about the effects of a smallpox vaccination program. Percentage of population vaccinated Deaths due to smallpox Deaths due to vaccination side effects 180 160 140 120 100 10 18 50 74 a. Calculate the marginal benefit (in terms of lives saved) and the marginal cost (in terms of lives lost) of increasing the percentage of the population vaccinated from 20% to 30%. In addition, calculate the net increase in human lives. MB: lives saved MC lives lost Net benefit lives saved b. Using marginal analysis, determine the optimal percentage of the population that should be vaccinated. Optimal percentage

Answer 1

Ans. A) Margina Benefit would be : 20 lives saved

Marginal Cost would be : 8 lives lost

Net Benefit = 20 - 8 = 12 lives

B) Optimal level of vaccination would be at a point where Marginal Benefit is more than Marginal Cost ie at 50% because after that , MC tends to be more than the Marginal Benefit.

Best of Luck !! !!