Suppose That a Vaccine Is Developed for a Highly Contagious

question 72

Multiple Choice

Suppose that a vaccine is developed for a highly contagious strain of flu.The likelihood that anyone will get this flu decreases as more people receive the vaccine.One of the demand curves in the diagram reflects private benefits and the other reflects social benefits.
Refer to the figure above.If the flu vaccine is provided by private markets,deadweight loss will be _______.

• A) zero
• B) $375
• C) $500
• D) $1,125

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Definitions:

Bullwhip Effect

The Bullwhip Effect describes the phenomenon where variability in consumer demand causes progressively larger fluctuations in demand experienced by upstream suppliers in a supply chain.

Efficient Frontier

In finance, a set of optimal portfolios that offer the highest expected return for a given level of risk or the lowest risk for a given level of expected return.

Responsiveness

The ability of an organization or system to quickly react to changes or needs within its environment or among its stakeholders.

Supply Chain

The network of all the individuals, organizations, resources, activities and technology involved in the creation and sale of a product, from the delivery of source materials from the supplier to the manufacturer, and eventually to the end user.