Your consulting firm has been contracted by the government of San Escobar to provide recommendations regarding influenza immunizations. Currently, the government of San Escobar does not intervene in the market for flu immunizations in any way and the market is best characterised as perfect competition. Assume that there is an equal number of older adults (+65 years old) and younger adults (18-22 years old) living in San Escobar. Assume also that each citizen buys their own immunization.

Influenza (the flu) is a highly contagious disease, usually prevented by vaccination and treated by managing symptoms. Spread by body fluids from infected people, symptoms include a runny nose and sore throat. Flu can affect anyone. The same vaccination is given to all age groups and equally effective for each age group.

(6) Finally, the Noise Association of San Escobar got in touch with you saying that the factories producing influenza immunizations are very noisy and currently have their production lines working non-stop (24 hours per day). Upon further investigation you find out that the noise from the factories negatively impacts many residents and businesses. Does this change your response to question 1)? If yes, explain how. Does your response to question 3) change? Illustrate your answer using a graph. In your answer explore scenarios with different levels of noise. Assume that what Daniel found out still holds and include this information in your answer. [5pt]

Additional information (not the question but needed to answer):

(1) Juliette, who is one of the consultants on your team, says that the rate of flu immunizations is lower than socially optimal. Explain why you think she made this statement. Use both words and a graph to illustrate your answer. [1pt]

(3) What financial intervention would you recommend the government to use to bring the rates of immunization to socially optimal levels? Explain the mechanism through which this intervention works. Would this intervention be the same in each age group? If no, how would it differ between the age groups and why? [3pt]