QUESTION

Text
Image


Feedback See Hint The table below shows the marginal private benefits and the marginal private costs of flu shots. The marginal private benefits represent the market demand curve $\left(\mathrm{D}_{\text {Int }}\right)$, and the marginal private costs represent the market supply curve $\left(\mathrm{S}_{\text {Int }}\right)$. \begin{tabular}{|c||c||c||} \hline \multicolumn{1}{|c||}{ Quantity of flu shots } & $\begin{array}{c}\text { Marginal private benefits } \\ \mathrm{D}_{\text {Internal }}\end{array}$ & $\begin{array}{c}\text { Marginal private costs } \\ \mathrm{S}_{\text {Internal }}\end{array}$ \\ \hline \hline 1,000 & $\$ 2,500$ & $\$ 1,800$ \\ \hline 2,000 & $\$ 2,250$ & $\$ 1,900$ \\ \hline 3,000 & $\$ 2,000$ & $\$ 2,000$ \\ \hline 4,000 & $\$ 1,750$ & $\$ 2,100$ \\ \hline 5,000 & $\$ 1,500$ & $\$ 2,200$ \\ \hline 6,000 & $\$ 1,250$ & $\$ 2,300$ \\ \hline 7,000 & $\$ 1,000$ & $\$ 2,400$ \\ \hline 8,000 & $\$ 750$ & $\$ 2,500$ \\ \hline 9,000 & $\$ 500$ & $\$ 2,600$ \\ \hline \hline \end{tabular} Suppose that getting a flu shot generates a positive externality, and the external benefit is $\$ 1,500$ per thousand flu shots. Compared to the socially optimal amount of flu shots, the amount of flu shots taken at the market equilibrium is 3000 shots too

Public Answer

TINREB The First Answerer