A medical vaccine is produced and sold in a perfectly competitive market. Assume that the medical vaccine generates a positive externality in consumption within the society. (a) Draw a properly labeled graph for a competitive market providing this medical vaccine and show each of the following. (i) The market equilibrium quantity, labeled QC (ii) The socially optimal quantity, labeled QS (iii) The area of the deadweight loss, shaded completely (b) Identify one policy action that would lead to the production of the socially optimal quantity of the vaccine. (c) Would a binding price ceiling result in the production of the socially optimal quantity of the vaccine? Explain
A medical vaccine is produced and sold in a
(a) Draw a properly labeled graph for a competitive market providing this medical vaccine and show each of the following.
(i) The
(ii) The socially optimal quantity, labeled QS
(iii) The area of the
(b) Identify one policy action that would lead to the production of the socially optimal quantity of the vaccine.
(c) Would a binding
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