16 Eradication of a disease with a vaccine subsidy. A terrible disease called fictitia is ravaging the woebegone nation of Pcoria. Fortunately, government scientists have just discovered the formula for an effective vaccine. Given current raw material prices, it costs $10 to produce each dose of vaccine. Assume that Pcoria has 100 citizens, and that the demand for vaccine in the first time period is Q=100 – where P is vaccine price and y is disease prevalence. a Assume a competitive vaccine manufacturing market and a disease prevalence of 20% (y =0.2). How many citizens demand the vaccine this period? b After this initial round of vaccinations, demand for the vaccine plummets because many citizens have been vaccinated and do not need another vaccine. Among the unvaccinated population, demand is now %3D Q=50 – The fictitia outbreak has slowed down considerably but the prevalence is still ris- ing. Now assume y =0.25. How many unvaccinated citizens will demand vaccine this period? c The demand for vaccine in the third period Q= 40 – P/y. Because of the suc- cess of the vaccination campaign, disease prevalence is now 10%. How many unvaccinated citizens demand vaccine this period?

16 Eradication of a disease with a vaccine subsidy. A terrible disease called fictitia is ravaging the woebegone nation of Pcoria. Fortunately, government scientists have just discovered the formula for an effective vaccine. Given current raw material prices, it costs $10 to produce each dose of vaccine. Assume that Pcoria has 100 citizens, and that the demand for vaccine in the first time period is Q=100 – where P is vaccine price and y is disease prevalence. a Assume a competitive vaccine manufacturing market and a disease prevalence of 20% (y =0.2). How many citizens demand the vaccine this period? b After this initial round of vaccinations, demand for the vaccine plummets because many citizens have been vaccinated and do not need another vaccine. Among the unvaccinated population, demand is now %3D Q=50 – The fictitia outbreak has slowed down considerably but the prevalence is still ris- ing. Now assume y =0.25. How many unvaccinated citizens will demand vaccine this period? c The demand for vaccine in the third period Q= 40 – P/y. Because of the suc- cess of the vaccination campaign, disease prevalence is now 10%. How many unvaccinated citizens demand vaccine this period?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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