Edgar's expected private benefit from the flu shot is $15, and it would cost him $20 to get vaccinated. Therefore, which of the following is correct?
A) It is socially optimal for Edgar to get the flu shot if the social benefits of the shot exceed $20.
B) The external benefits of the flu shot equal $5 ($20 - $15).
C) Even without a government subsidy, Edgar is certain to be vaccinated.
D) The deadweight loss is eliminated if Edgar is vaccinated and the external benefits are $4.

Question

Quizplus · Accepted Answer

Since Edgar's expected private benefit from the flu shot is less than the cost of vaccination, he may not voluntarily choose to receive the vaccine. However, if the social benefits of the shot exceed $20, it is socially optimal for him to get vaccinated because the external benefits of lessening the spread of the flu will make up the difference. Therefore, option A is correct. Option B is incorrect because it only calculates the external benefit, not the total social benefit. Option C is incorrect because there is no information to suggest Edgar will always choose to be vaccinated without a subsidy. Option D is incorrect because it implies that there is a deadweight loss when Edgar doesn't get vaccinated, which is not stated in the initial scenario.

Edgar's Expected Private Benefit from the Flu Shot Is $15