Question 2 (5 marks)

The effectiveness of vaccinations in preventing the Covid-19 is well established.

(a)What are the features of Covid-19 vaccine that imposes externalities and explain the concept of externality? (2 marks)

(b)Explain whether these are:

a.positive or negative externalities? (1/2 mark)

b.production or consumption externalities (1/2 mark)

(c)In a supply and demand diagram, explain why there will be an underconsumption of covid-19 vaccines without government intervention. (2 marks)