Suppose an unvaccinated man Tom would get $10 of private benefit out of a flu shot. The flu shot costs $20 at the local clinic. The herd immunity benefit of the shot is worth an additional $15 to Tom's friends and co-workers. (1) What is the private cost incurred when Tom gets the shot? (2) Is it privately efficient for Tom to get the shot? (3) What is the public or social cost incurred when Tom gets the shot? (4) What is the public or social benefit when Tom gets the shot? (5) Is it publicly/socially efficient for Tom to get the shot? Hint: please consider only the information provided in the question. Any other potential cost or benefit can be ignored. Please explain your answers. Do not simply provide a Yes or No as the answer. If it involves calculations, show your steps.
Suppose an unvaccinated man Tom would get $10 of private benefit out of a flu shot. The flu shot costs $20 at the local clinic. The herd immunity benefit of the shot is worth an additional $15 to Tom's friends and co-workers. (1) What is the private cost incurred when Tom gets the shot? (2) Is it privately efficient for Tom to get the shot? (3) What is the public or social cost incurred when Tom gets the shot? (4) What is the public or social benefit when Tom gets the shot? (5) Is it publicly/socially efficient for Tom to get the shot? Hint: please consider only the information provided in the question. Any other potential cost or benefit can be ignored. Please explain your answers. Do not simply provide a Yes or No as the answer. If it involves calculations, show your steps.
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter13: Positive Externalities And Public Goods
Section: Chapter Questions
Problem 24P: Assume that the marginal private costs of a film producing fuel-efficient can; is greater than the...
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Transcribed Image Text:Suppose an unvaccinated man Tom would get $10 of private benefit out of a flu shot.
The flu shot costs $20 at the local clinic. The herd immunity benefit of the shot is
worth an additional $15 to Tom's friends and co-workers.
(1) What is the private cost incurred when Tom gets the shot?
(2) Is it privately efficient for Tom to get the shot?
(3) What is the public or social cost incurred when Tom gets the shot?
(4) What is the public or social benefit when Tom gets the shot?
(5) Is it publicly/socially efficient for Tom to get the shot?
Hint: please consider only the information provided in the question. Any other
potential cost or benefit can be ignored.
Please explain your answers. Do not simply provide a Yes or No as the answer. If it
involves calculations, show your steps.
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