Suppose That a Vaccine Is Developed for a Highly Contagious

question 60

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.This externality could most effectively be corrected by:

• A) taxing vaccines.
• B) encouraging people to negotiate private payments to those who receive the vaccine.
• C) subsidizing vaccines.
• D) free provision of 275 vaccines.

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Definitions:

Nonrefundable Credit

A tax credit that can only reduce a taxpayer’s liability to zero, but unlike refundable credits, any excess is not paid out to the taxpayer.

Adoption Credit

A tax benefit offered to taxpayers to offset some costs of legally adopting a child, which can reduce tax liability.

Foreign Tax Credit

A non-refundable tax credit for income taxes paid to a foreign country, aimed at reducing double taxation of the same income.

Born In

Generally refers to the place or country where an individual was born.