Flu Shots Provide a Positive Externality

question 77

Multiple Choice

Flu shots provide a positive externality. Suppose that the market for vaccinations is perfectly competitive. Without government intervention in the vaccination market, which of the following statements is correct?

• 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 per-shot subsidy could turn an inefficient situation into an efficient one.
• D)All of the above are correct.

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Definitions:

Demand Stability

The condition in which the demand for a product or service does not experience sudden large fluctuations over time.

Learning Within Organizations

Processes or activities through which individuals and groups acquire, share, and apply knowledge and skills to improve organizational effectiveness.

Bullwhip Effect

The phenomenon where small fluctuations in demand at the retail level cause progressively larger fluctuations in demand at the wholesale, distributor, and manufacturer levels.

Behavioral Obstacles

Psychological and emotional barriers that influence individuals' decision-making processes and actions.