This externality could most effectively be corrected by
A) taxing vaccines.
B) encouraging people to negotiate private payments to those who receive the vaccine.
C) subsidizing vaccines.
D) free provision of 275 vaccines
E) relying strictly on market allocation of vaccines.

Question

Quizplus · Accepted Answer

The most effective way to correct a negative externality is to subsidize the activity that produces the positive externality. Therefore, subsidizing vaccines would incentivize individuals to receive them and would help to address the negative externality of disease spread. Taxing vaccines or relying strictly on market allocation would likely reduce the number of people who receive vaccines, exacerbating the negative externality. Encouraging private payments would also be unlikely to address the externality sufficiently. While free provision of vaccines (D) would increase the number of people receiving them, it may not incentivize healthy behaviors in the long term and could become unsustainable.

This Externality Could Most Effectively Be Corrected by