III. (8 points) Written answer, graphical analysis required. 1. The coronavirus pandemic has drawn attention to the importance of vaccinations (and other health care services) for promoting public health and well-being. Draw a supply and demand graph for vaccines that shows a private (individual) market demand curve for vaccines (D) that obeys the law of demand and a market supply curve (S) for vaccines that obeys the law of supply. Label the equilibrium price (P) and quantity (Q) of vaccines produced in the free market. 2. Explain in words and show in your graph the "spillover benefit" that occurs when an individual purchases/receives a vaccine. Label in your graph an MSB curve that shows the marginal social benefits of individuals purchasing/receiving a vaccine. Label in your graph the socially efficient level of vaccines (Q*) and compare to the free market output (Q). Explain why the free market does not produce the socially efficient amount of vaccines and explain what is meant by a socially efficient level of production. 3. What policy (or policies) would you recommend to create a socially economic efficient level of vaccines?Governments Zero In $4 / 21 / 2 On an Essential Ratio BY STEPHEN FIDLER In the center of the U.S. health crisis, New York Gov. Governments across Europe Andrew Cuomo said on Sun- and in the U.S. say they have day that the infection ratio in driven down a key variable to the state had been slowed to levels that suggest that the 0.9, but added, "We have a lockdowns that plunged their very small margin of error economies into the deep here as we navigate going for- freeze are succeeding in con- ward." If the reproduction ra- taining the spread of the tio were to rise slightly to 1.2, deadly new coronavirus. he said, "the virus is increas The variable measures the ing and is an epidemic and an average number of other peo- outbreak and is out of con- ple each carrier of the new trol." coronavirus infects. This infec In Europe, governments tion ratio will be avidly have also said they have watched as policy makers cali- brought the ratio below one, brate the task of rolling back while emphasizing that the measures that have kept hun- battle against the virus is far dreds of millions of people at from won and that the ratio home. could surge again. French If the reproduction ratio is Prime Minister Edouard Phi- below one, the epidemic pe- lippe said on Sunday that the ters out. The closer to one, the variable in France had fallen slower the decline, and the to 0.6, showing that the greater risk of a resurgence. If spread "is slowing and slow- the ratio sticks above one, the ing rapidly" thanks to the con- epidemic will gather momen- finement measures that have tum. The good news is across been in place since March 17. Europe and in parts of the U.S. The latest ratios represent the ratio has fallen below one. a significant decline from the The trouble is that the average of three to four that spread of the virus is highly many studies estimate would sensitive to whether the ratio have been the reproduction ra- is just below or just above tio if nothing had been done. one. That sensitivity means With an unmitigated rate of governments will have to esti- spread, the serious symptoms mate how proposed relaxation of Covid-19, the disease caused measures such as opening by the new coronavirus, suf- schools, restarting factories fered by a minority of patients and reopening stores will ar would have overwhelmed fect the ratio, and they will health systems in most coun- have to continue to monitor tries. the invert in real time. if the Scientists are still working number rises beck above one, on models that may help in some restrictions may have to calibrating measures to relax be reimposed. the lockdowns