Suppose That Flu Shots Create a Positive Externality Equal to $9

question 60

Multiple Choice

Suppose that flu shots create a positive externality equal to $9 per shot. Further suppose that the government offers a $9-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:

Mental Rotations

The cognitive process of rotating mental representations of two-dimensional and three-dimensional objects as part of spatial reasoning and visualization.

Two Dimensions

Relates to having two measurements or aspects, such as length and width, often used to describe flat surfaces or to represent ideas in a simplified form.

Three Dimensions

Pertains to objects that have depth, width, and height, contributing to their solid form.

Finke's Principle

A theoretical proposition related to the creative process, emphasizing the role of imagined images and scenarios in generating innovative solutions or products.