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Indicate whether the statement is true or false, and justify your answer.Herd immunity is a negative health externality.

EBK HEALTH ECONOMICS AND POLICY

7th Edition

ISBN:9781337668279

Author:Henderson

Publisher:Henderson

Chapter3: Analyzing Medical Care Markets

Section: Chapter Questions

Problem 3QAP

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Concept explainers

Market Failure Analysis

To understand Market failure, we need to first understand welfare economics. An Italian economist, Vilfredo Pareto stated that allocation of resources in an efficient manner such that an economic change, which harms no one and makes someone better off, indicates an increase in social welfare. It is also called Pareto Optimality, where resources cannot further be reallocated without harming one. This does not apply to those economic changes, which harm some and benefit others. social welfare increases if the utility of any of its members' increases and none decrease in the economy.

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Indicate whether the statement is true or false, and justify your answer.
Herd immunity is a negative health externality.

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