Marginal Marginal (millions of PrivateExternal Benefht Benefit Vaccinations) (do
ID: 1118013 • Letter: M
Question
Marginal Marginal (millions of PrivateExternal Benefht Benefit Vaccinations) (dollars) dollars) 12 10 4 4 3 Vaccinations provide both private benefits and external benefits. The table provides information on the marginal private benefit and the marginal external benefit associated with vaccinations against varicella (chicken pox). If the marginal cost of a varicolla vaccination is $9, then the efficient output is O 5 million vaccinations which is greater than the competitive equilibrium output of 4 million vaccinations 3 million vaccinations which is the same as the competitive equilibrium output of 3 million vaccinations 5 million vaccinations which is greater than the competitive equilibriunm output of 1 million vaccinations 3 million vaccinations which is less than the competitive cquilibrium output of 4 million vaccinations - 3 million vaccinations which is less than the competitive equilibrium output of 5 million vaccinationsExplanation / Answer
Answer.) 5 million vaccinations which is greater than the competitive equilibrium output of 4million vaccinations
in case of competitive equilibrium, the firm would match its marginal cost to its marginal private benefits to reach equilibrium. Efficient equilibrium would require firm to consider the external benefits associated with vaccination and must match its marginal cost with the marginal social benefit which includes both marginal private benefit and Marginal external benefits.