Suppose That Flu Shots Create a Positive Externality Equal to $12

question 69

Multiple Choice

Suppose that flu shots create a positive externality equal to $12 per shot. What is the relationship between the equilibrium quantity and the socially optimal quantity of flu shots produced?

• A)They are equal.
• B)The equilibrium quantity is greater than the socially optimal quantity.
• C)The equilibrium quantity is less than the socially optimal quantity.
• D)There is not enough information to answer the question.

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Definitions:

Extra-cellular Substances

Biochemical compounds found outside of cells that provide structural and biochemical support to surrounding cells.

Specialized Cells

Cells differentiated to perform specific functions necessary for the organism's survival, such as nerve cells, muscle cells, or blood cells.

Tissue

Groups of similar cells and their extracellular matrix from the same origin that together carry out a specific function.

Embryonic Germ Layer

One of the three primary layers of cells (endoderm, mesoderm, ectoderm) in the very early embryo that gives rise to all the body's organs and tissues.