A flu vaccine has an associated ________ externality.In the absence of government intervention,the quantity of flu vaccines purchased will be ________ the socially optimal quantity.
A)positive; the same as
B)negative; the same as
C)negative; less than
D)positive; less than
E)positive; more than

Question

Quizplus · Accepted Answer

A flu vaccine has a positive externality as getting vaccinated not only benefits the individual but also helps in controlling the spread of flu in the community. In the absence of government intervention, the quantity of flu vaccines purchased by individuals will be less than the socially optimal quantity because they do not take into account the positive effect of their vaccination on others. Hence, the market will underprovide flu vaccines.

A Flu Vaccine Has an Associated ________ Externality