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fabz06 fabz06
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A year ago
Positive and Negative Externalities

The graph shows the market for flu shots.
 

Assume that P1=$2.00, P2=$2.50, P3=$5.75, P4=$8.00, P5=$9.75, P6=$10.50, P7=$12.75, Q1=160, and Q2=425 and that D1 represents the marginal private benefit of flu shots and D2 represents the marginal social benefit of flu shots. At the efficient equilibrium, ________ flu shots are sold at a price of ________. If the government determines that flu shots create a positive externality, it can ________ (tax/subsidize) flu shots by an amount equal to ________, meaning consumers pay a price of ________.

▸ 425, $8.00, tax, $5.50, $11.25

▸ 160, $5.75, subsidize, $4.00, $5.75

▸ 425, $8.00, subsidize, $5.50, $2.50

▸ 160, $5.75, tax, $4.00, $13.75
Textbook 
Macroeconomics

Macroeconomics


Edition: 3rd
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crwille78crwille78
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fabz06 Author
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A year ago
You make an excellent tutor!
Goku935
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Yesterday
this is exactly what I needed
megan.xo
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2 hours ago
Smart ... Thanks!
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