Flu Injections Are Associated with a Positive Externality

question 44

Multiple Choice

Flu injections are associated with a positive externality. (Those who come in contact with people who are inoculated are helped as well.) Given perfect competition with no government intervention in the vaccination market, which of the following holds?

• A) At the current output level, the marginal social benefit exceeds the marginal private benefit.
• B) The current output level is inefficiently low.
• C) A subsidy on each injection could turn an inefficient situation into an efficient one.
• D) All of the above are correct.

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