Many livestock farmers give antibiotics to their herds. The antibiotics help breed drug-resistant bacteria, making them less effective. This harms future users of antibiotics, who will be using less-effective drugs.
a. What is the nature of the market failure?
b. Explain whether livestock farmers are more likely to overuse or underuse antibiotics.
c. Using supply and demand curves, illustrate the equilibrium outcome and socially optimal equilibrium in the antibiotic market.

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The Answer of Many livestock farmers give antibiotics to their herds. The antibiotics help breed drug-resistant bacteria, making them less effective. This harms future users of antibiotics, who will be using less-effective drugs.
a. What is the nature of the market failure?
b. Explain whether livestock farmers are more likely to overuse or underuse antibiotics.
c. Using supply and demand curves, illustrate the equilibrium outcome and socially optimal equilibrium in the antibiotic market.

Many Livestock Farmers Give Antibiotics to Their Herds