Question

Complete the following table. Table: The Costs of Antibiotics Quantity of Antibiotics Marginal Benefit to Buyers...

Complete the following table.

Table: The Costs of Antibiotics

Quantity of Antibiotics

Marginal Benefit to Buyers

Marginal Cost to Sellers

External Cost

Marginal Social Benefit

1

25

5

10

2

20

10

10

3

15

15

10

4

10

20

10

5

5

25

10

What is the market equilibrium quantity and what is the efficient equilibrium quantity?

Market Quantity:

Efficient Equilibrium Quantity:

What is the socially efficient quantity/price?

What is the price a consumer’s insurance will pay and how much will the government be willing to pay?

What tax or subsidy amount would restore the market to social optimal?

What is the deadweight loss without the vaccine?

What is the price elasticity of demand for vaccines along the private marginal benefit curve?

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Answer #1

MARGINAL COST ( MSC )= Marginal Cost(MC) + External Cost(MEC)

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