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Figure: External Benefit
-(Figure: External Benefit) Refer to the figure. Shingles is a painful and blistering skin rash that generally affects older adults. The shingles virus is transmitted by those with an active outbreak, and it can cause chicken pox in people who never had it. The efficient number of vaccinations is ______, and the market quantity of vaccinations is ______.
A) 14; 10
B) 8; 4
C) 7; 5
D) 10; 5

Question

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Figure: External Benefit 
-(Figure: External Benefit) Refer to the figure. Shingles is a painful and blistering skin rash that generally affects older adults. The shingles virus is transmitted by those with an active outbreak, and it can cause chicken pox in people who never had it. The efficient number of vaccinations is ______, and the market quantity of vaccinations is ______.
A) 14; 10 
B) 8; 4 
C) 7; 5 
D) 10; 5

Quizplus · Accepted Answer

The efficient number of vaccinations is where the demand curve (private value) intersects with the social value (marginal social benefit) curve. In this figure, that point occurs at 7 vaccinations. At that point, the social benefit of the vaccinations (preventing the spread of the virus to other individuals) is fully accounted for. The market quantity of vaccinations is where the demand curve intersects with the supply curve, which is at 5 vaccinations. This is not the efficient quantity because it does not take into account the external benefits to others. Therefore, the market is producing too few vaccinations to reflect the full social benefit.

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