An individual chooses to get a vaccine to help protect themselves against a disease, which also helps prevent others in society from getting sick. Graphically demonstrate the vaccine consumption market. On your graph, label the supply curve, the demand/private benefit curve, the social benefit curve, the market equilibrium level of output, and the efficient level of output.

An individual chooses to get a vaccine to help protect themselves against a disease, which also helps prevent others in society from getting sick. Graphically demonstrate the vaccine consumption market. On your graph, label the supply curve, the demand/private benefit curve, the social benefit curve, the market equilibrium level of output, and the efficient level of output.

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter17: Market Failure: Externalities, Public Goods, And Asymmetric Information

Section: Chapter Questions

Problem 1WNG

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The chart above shows the market for polio vaccine in Pakistan. This vaccine provides external benefits because vaccinating one person reduces the likelihood of other people catching the disease. a.) If there is a competitive market and there is no government intervention, what will be the amount of vaccine? b. ) If a foundation takes over the cost of the vaccine, what will be the amount of vaccine used in the market? How will the market efficiency change? Why?
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Suppose that we have a model that estimates that taking the COVID-19 vaccine creates a positive externality to society that is at least equal to $1500 per vaccine. (Amazing, right? Well, remember that I made it up.) This means that for every person that takes the vaccine, the benefits to society will be $1500 or more. a. First, what factors do you think go into estimating the benefits of $1500 per vaccine. This is kind of a brainstorming question – but it is worth points so don’t skip it. b. What is the relationship between the equilibrium quantity of vaccines and the socially optimal quantity of vaccines?
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