The market for measles vaccines is depicted. As more people receive shots, fewer people get measles, and therefore there are fewer people to pass the disease along to others. Therefore, the chance of getting measles decreases for everyone, even those who do not purchase a vaccine. This is an example of a positive externality. The demand curve in the graph measures private marginal benefits, and the supply curve measures the marginal cost of vaccines. The demand curve ignores the external benefits of thevaccine

The market for measles vaccines is depicted. As more people receive shots, fewer people get measles, and therefore there are fewer people to pass the disease along to others. Therefore, the chance of getting measles decreases for everyone, even those who do not purchase a vaccine. This is an example of a positive externality. The demand curve in the graph measures private marginal benets, and the supply curve measures the marginal cost of vaccines. The demand curve ignores the external benets of the vaccine. Move the line labeled Subsidy on the graph to indicate the subsidy amount that moves the outcome from the private market result to the socially optimal quantity. The Market for Measles Vaccinations Based on the graph, what is the total amount paid so in subsidies? 1s - - - - 1a .0 - . . . . . . total amount 1n subsldles: $ million 17 . . . . Subsidy . . . . Suppl} 13 . . . 15 14 1a 12 g 11 _3 10 E 9 a ; Marginal social benet 5 4 3 2 Demand 1 o 012 3 4 5 S l? B 9101112131415161?181920 Quantity of vaccines (millions)