Suppose the market demand and supply for vaccination is given by the following equations where P is the price per vaccination and Q is the number of vaccinations. You can consider them as marginal private benefit and marginal private cost functions. • Market Demand: P=100-4Q • Market Supply: P=Q Suppose that vaccination generates a positive externality for the population. Assume that the estimated benefit of vaccination for each person is $20. What is the price and the quantity of vaccination in the market where the external benefit is not internalized by either the producers or the consumers? a. P=20 Q=20 b. P=20 Q=10 c. P=10 Q=20 d. P=10 Q=10 What is the socially optimal number of vaccinations in this market? Find out the quantity when the externality is internalized in the market. a. Q=4 b. Q=14 c. Q=18 d. Q=24
Suppose the market demand and supply for vaccination is given by the following equations where P is the price per vaccination and Q is the number of vaccinations. You can consider them as marginal private benefit and marginal private cost functions. • Market Demand: P=100-4Q • Market Supply: P=Q Suppose that vaccination generates a positive externality for the population. Assume that the estimated benefit of vaccination for each person is $20. What is the price and the quantity of vaccination in the market where the external benefit is not internalized by either the producers or the consumers? a. P=20 Q=20 b. P=20 Q=10 c. P=10 Q=20 d. P=10 Q=10 What is the socially optimal number of vaccinations in this market? Find out the quantity when the externality is internalized in the market. a. Q=4 b. Q=14 c. Q=18 d. Q=24
Chapter19: Externalities And Public Goods
Section: Chapter Questions
Problem 19.9P
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Suppose the market demand and supply for vaccination is given by the following equations where P is the price per vaccination and Q is the number of vaccinations. You can consider them as marginal private benefit and marginal private cost functions. • Market Demand: P=100-4Q • Market Supply: P=Q Suppose that vaccination generates a positive externality for the population. Assume that the estimated benefit of vaccination for each person is $20.
What is the price and the quantity of vaccination in the market where the external benefit is not internalized by either the producers or the consumers?
a. P=20 Q=20 b. P=20 Q=10 c. P=10 Q=20 d. P=10 Q=10
What is the socially optimal number of vaccinations in this market? Find out the quantity when the externality is internalized in the market.
a. Q=4 b. Q=14 c. Q=18 d. Q=24
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