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.

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Definitions:

Rate Of Return

The increase or decrease in the value of an investment during a given time frame, represented as a percentage of the investment's original price.

Investor Indifferent

A situation in finance where an investor is neutral between two or more investment options as they yield the same expected return or utility.

Department Store

A large retail establishment that offers a wide range of products across multiple categories, often in different departments.

Interest Rate

Interest Rate is the percentage at which interest is paid by borrowers for the use of money that they borrow from a lender.