The Demand for Injections to Immunize Against a Disease Is

question 110

Essay

The demand for injections to immunize against a disease is given as:
P = 13 0.0005Q,
where P = price in dollars, and Q = quantity measured as number of shots per month. The marginal social benefit function has the same vertical intercept as the demand curve and one half the slope (one half in absolute value). The marginal cost of injections is a constant $8.
a. With a competitive market, what price and quantity will prevail, assuming that there is no government intervention?
b. Explain why the demand curve and marginal social benefit functions are different in this case. What is the socially optimal quantity in the market?
c. What government policies could be used to bring about the optimal outcome?

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Definitions:

Intracellular Mediator

A substance inside a cell that transmits signals from a receptor to a target, often amplifying the signal and resulting in a cellular response.

Water-soluble Hormone

A hormone that dissolves in water, facilitating rapid response and transport in the body.

Membrane Receptor

A protein molecule embedded within, or attached to, the membrane of a cell that receives chemical signals from outside the cell.

G-protein

A type of protein that acts as a molecular switch inside cells, involved in transmitting signals from a variety of stimuli outside a cell to its interior.