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:

Existential Theory

A psychological philosophy or therapy approach that emphasizes individual freedom, choice, and responsibility, focusing on the meaning of life and the search for value.

Existential Theory

A psychological theory that emphasizes individual existence, freedom, and choice as core human values, focusing on the meaning of life and the search for personal identity and authenticity.

Adolescents

The transitional stage of development from childhood to adulthood, characterized by significant physical, psychological, and social changes.

Existential Theory

A psychological philosophy that focuses on exploring the human condition and concerns such as mortality, meaning, freedom, and the essence of being through a person-centered therapeutic process.