Before the flu season begins, Jeremy gets a flu shot. As a result, Jeremy and several of his friends and relatives avoid the flu for the entire flu season. It would make sense to argue that
A)flu shots provide a positive externality, and that flu shots should be subsidized.
B)if flu shots are not subsidized, then the number of people getting flu shots will be smaller than the socially optimal number.
C)the externality generated by flu shots is more like the externality generated by education than the externality generated by pollution.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

A) Flu shots provide a positive externality because they not only benefit the individual getting the shot but also others around them by reducing the spread of the flu. Subsidizing flu shots would encourage more people to get vaccinated, leading to a greater reduction in the spread of the flu. 
B) If flu shots are not subsidized, then fewer people may choose to get vaccinated, resulting in a smaller reduction in the spread of the flu. This means that the socially optimal number of people getting vaccinated may not be reached.
C) The externality generated by flu shots is more like the externality generated by education because both provide benefits to not just the individual but also society as a whole. Pollution, on the other hand, generates negative externalities and harms both individuals and society.

Before the Flu Season Begins, Jeremy Gets a Flu Shot