If a private market determines the quantity of smallpox vaccinations, which of the following is true?
A)The equilibrium quantity is too low for efficiency.
B)The equilibrium price and quantity are too high for efficiency.
C)The equilibrium price is efficient.
D)The equilibrium quantity is too high for efficiency.
E)The equilibrium price and quantity are efficient.

Question

Quizplus · Accepted Answer

Smallpox vaccinations have positive externalities, meaning the social benefits exceed the private benefits. In a private market, this leads to underproduction, making the equilibrium quantity too low for efficiency.

If a Private Market Determines the Quantity of Smallpox Vaccinations