Polio is a disease caused by a contagious virus that can result in paralysis. A vaccine prevents the disease and also its contagion. The government decides to subsidize the application of this vaccine by offering it for free. a. Explain how this subsidy will impact the amount of vaccines applied compared to the free market outcome with no subsidy, i.e. where people would need to pay for their own vaccine. b. Why is this subsidy different from a subsidy the government may grant on a good that generates no externalities like food? (hint: deadweight loss is not the same),

Polio is a disease caused by a contagious virus that can result in paralysis. A vaccine prevents the disease and also its contagion. The government decides to subsidize the application of this vaccine by offering it for free. a. Explain how this subsidy will impact the amount of vaccines applied compared to the free market outcome with no subsidy, i.e. where people would need to pay for their own vaccine. b. Why is this subsidy different from a subsidy the government may grant on a good that generates no externalities like food? (hint: deadweight loss is not the same),

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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