DQ6: Microeconomics [10 marks]

The following quotes are from The Sydney Morning Herald, 27 May 2021.

"AstraZeneca, which has pledged not to profit from its shot during the pandemic, is charging $US3.50 to $US5.25 a dose, compared with a Pfizer price of $US12 to $US14.50 and Moderna's prices ranging from $US18 to $US32".

a)Why are Australians not charged for the Pfizer and AstraZeneca vaccines? [1 mark]

b)Illustrate this situation using an appropriate, well labelled diagram. [3 marks]

c)Rather than allowing a free market equilibrium for the COVID vaccine, comment on the likely effect of the government intervention's effect on the price of vaccines. Has it raised or lowered the price of the vaccine? [2 marks]

The following quote is from The Guardian 25 May 2021, regarding COVID vaccines in Victoria:

"On Monday and Tuesday many people reported being turned away. Yves Rees said they tried to get vaccinated at the exhibition building in Carlton on Monday night, but were turned away by a nurse.

" 'She said ... they'd been inundated with people in [phase] 2B seeking vaccinations and they'd been turning them away,' Rees said".

[Note: "Phase 2B" includes people who are 16-49 years old, who do not have other reasons to qualify for earlier vaccinations].

d)In a supply and demand diagram, illustrate the market for vaccinations for people in phase 2B in Australia, assuming the above quote is representative. [2 marks]

e)What economic change would likely rapidly move the market for Phase 2B vaccinations towards equilibrium? What is a likely reason the Australian government is not adopting such a strategy? [2 marks]