Suppose That Flu Shots Create a Positive Externality Equal to $9

question 60

Multiple Choice

Suppose that flu shots create a positive externality equal to $9 per shot. Further suppose that the government offers a $9-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:

LMRA

The Labor Management Relations Act, also known as the Taft-Hartley Act, which regulates labor-management relations in the United States.

Unfair Labor Practice

Actions by employers or unions that violate the rights of employees or the collective bargaining process as defined by labor laws.

Union

An organization of workers formed to protect and advance their rights and interests; a labor union.

Office of Federal Contract Compliance Programs

The Office of Federal Contract Compliance Programs (OFCCP) is a U.S. government agency responsible for ensuring that employers doing business with the Federal government comply with the laws and regulations requiring nondiscrimination and affirmative action.