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 below represents the private demand for the vaccine and the other represents the social demand for the vaccine. The government could increase total economic surplus by:
A)taxing production of the vaccine.
B)encouraging people to pay each other to get the vaccine.
C)subsidizing production of the vaccine.
D)providing 250 doses of the vaccine for free.

Question

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 below represents the private demand for the vaccine and the other represents the social demand for the vaccine.  The government could increase total economic surplus by:
A)taxing production of the vaccine. 
B)encouraging people to pay each other to get the vaccine. 
C)subsidizing production of the vaccine. 
D)providing 250 doses of the vaccine for free.

Quizplus · Accepted Answer

Subsidizing the vaccine would shift the private demand curve to the social demand curve.

Suppose That a Vaccine Is Developed for a Highly Contagious