Suppose That Flu Shots Create a Positive Externality Equal to $8

question 152

Multiple Choice

Suppose that flu shots create a positive externality equal to $8 per shot. Further suppose that the government offers a $6-per-shot subsidy to producers. 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:

Centration

The cognitive tendency in early childhood to focus on one aspect of a situation while neglecting others.

Modelling Clay

A pliable material used in art and education to create three-dimensional objects and forms through shaping and molding.

Conservation

In cognitive development, the understanding that certain properties of objects or substances do not change when their appearance is altered.

Preoperational Stage

The second stage in Piaget's theory of cognitive development, occurring roughly between the ages of 2 and 7, characterized by symbolic thinking, egocentrism, and a lack of logical reasoning.