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in the country of Borduria a vaccine has been introduced for the annoying but non-lethal disease Zap. People have to pay for the vaccine themselves.
in the country of Borduria a vaccine has been introduced for the annoying but non-lethal disease Zap. People have to pay for the vaccine themselves. Demand for the vaccine is given by p=100Q and supply by p=10+Q where p is price in kr and Q number of people that get the vaccination. a) What is equilibrium price and equilibrium quantity on this vaccine market? b) Getting a vaccination is typically associated with a positive externality. Briey explain the concept of positive externality. What could be a positive externality associated with someone getting vaccinated? c} Assume that the positive externality associated with getting vaccinated against Zap amounts to 20 kr for each Q. What is the socially efcient level of vaccinations? Is there a deadweight loss associated with the equilibrium level in a)? Use a gure to illustrate any deadweight loss that you nd and calculate how high the deadweight loss is. Intuitively, what is the reason for the deadweight loss? d) The government of Borduria now decides to offer a subsidy so that suppliers get 30 kronor from the government for each person vaccinated, in addition to whatever the customers are paying. What is the price that consumers are paying in this equilibrium and how many are now vaccinated? How high is the deadweight loss? Illustrate the situation in a gure and explain the reasons for a deadweight loss in this case
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