Suppose that total cost of vaccine production is the following:

() = 20,000 + 2!

where fixed cost is 20,000 and q denotes vaccine production. a. Find q where AC is minimized (and AC = MC). Graph AV and MC. b. Suppose that there are 4000 individuals with heterogenous preferences as some

are willing to pay more than others for a shot of vaccine. The number of individuals who want to be vaccinated depends, negatively, on the price of

vaccination as follows:

" =3000

If there is one producer (i.e., monopoly), then how many individuals will be

vaccinated? How much will the monopolist charge?