Question

For questions 11 - 12, refer to the following graph for the market of vaceines in a small community. The administration of vaceines not only protect the consumer from diseases, but belps enforce herd immunity meaning other the rest of the community is less likely to get catch the disease.. The external benefits are included in the creation of the marginal social benefit curve. Price 4000 52000 51015 30405060 Quantity in Thousands 11. How many vaccinations would the free market provide in the abeence of government intervention? A. 30 B. 40 ?.50 D. 60 12. What is the eflicient output? How many vaccinations would maximize social well-being? A. 30 B. 40 C. 50 D. 60

Answer 1

Answer:

11.

Correct option is A.

Explanation: Without government intervention Private firm would produce vaccines where MPB equates the MC ($). Which

12. Correct option is B.

Explanation: Social well being can be achieved if government intervene in the market and make private firm to produce 40 K units of vaccines as MSB equates MC($) here.

Conclusion: There is an underprovision of vaccines production when government is not intervening and external effects are present.