Suppose That Flu Shots Create a Positive Externality Equal to $20

question 19

Multiple Choice

Suppose that flu shots create a positive externality equal to $20 per shot. What is the relationship between the market equilibrium output level and the efficient equilibrium output produced?

• A)​They are equal.
• B)​The market equilibrium output level is greater than the efficient equilibrium output level.
• C)​The market equilibrium output level is less than the efficient equilibrium output level.
• D)​None of the above.

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Definitions:

Earned Income

Revenue generated from the sale of goods and services, as opposed to donations or grants.

Revenue

The total income generated by a company from its activities, before any expenses are subtracted.

Nonprofit-Corporate Relationship

The dynamics and partnerships between nonprofit organizations and for-profit companies, often focused on achieving mutual benefits or goals.

Licensing Agreement

A legal contract where a licensor allows a licensee to use, produce, or sell its intellectual property in exchange for compensation.