A few years ago, the supply of flu vaccine was cut in half (reduced by 50%) due to contamination found in Chiron's British facility. The market-clearing price of the vaccine had been $10 per immunization prior to this event.

a. Provide what you feel is a reasonable estimate of the demand elasticity for the flu vaccine and justify your answer. You must supply a numerical estimate to get credit for your answer

b. Explain the difference between a "decrease in supply" and a "shortage," and explain why we now have a shortage of flu vaccine.

c. Given the above information and your answer in part a., what would the price of flu vaccine be if the government simply sold the vaccine supplies to the highest bidders? You must supply a numerical answer for this part.

d. How will these events affect the market (price and quantity sold) of Tylenol or aspirin?