Question 4 a,b,c,d,e

Spring 2023 The figure below shows the private supply and demand for flu vaccines, which cause societal 4) Externality II (5 points) benefits in the form of herd immunity. Price S = Private Cost = Social Cost a. What type of externality is this? (be $20 specific as with the last problem.) $18 $16 $14 Suppose that the external benefit $12 from flu vaccines is worth $6 per vaccine. Graph the social benefit $10 curve for flu vaccines that accounts $8 ...... for the external benefit. $6 We will need to be precise here, so I recommend plotting each endpoint individually first, and then using a $2 D = Private Benefit ruler to draw a line connecting them. 0 50 100 150 200 250 300 350 400 4 450 500 C. Without any intervention into the market, how many flu vaccines will Flu vaccines (millions) be given? What is the efficient (or socially optimal) quantity of flu vaccines? d. Without intervention in this market, what is the deadweight loss that arises as a result of the externality? Shade in the area on the graph and calculate the dollar value. e. Suppose the government wants to internalize the externality and bring the market to the socially optimal quantity. Describe one policy option that you would recommend, and be specific about the amount of the intervention