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.

Identify the relationship and differences between short-run and long-run decision-making for firms

Determine how output decisions are influenced by cost curves and market price

Describe the role of marginal analysis in profit maximization and loss minimization

Explain how the concepts of average total cost (ATC), average variable cost (AVC), and marginal cost (MC) relate to firm production decisions

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Definitions:

Conservation

The principle that certain properties remain the same despite changes in the form of objects, or understanding the permanence of quantity despite changes in the shape or container.

Egocentrism

A cognitive characteristic in which an individual has difficulty seeing the world from perspectives other than their own, often observed in early childhood development.

Object Permanence

The realization that objects still exist even when they are not perceivable through sight, hearing, touch, smell, or any sensory means.

Egocentrism

A cognitive bias that causes individuals to interpret the world from their own perspective, often failing to understand that others may have different points of view.