Which of the following has a positive externality and hence can be under provided?
A) chronically ill people are not allowed to buy insurance.
B) health insurance purchased through an employer
C) vaccination
D) Health Maintenance Organizations
E) None of the above have a positive externality.

Question

Quizplus · Accepted Answer

Vaccination has a positive externality because when an individual is vaccinated, not only do they benefit from reduced risk of contracting the disease, but society as a whole benefits from reduced risk of the disease spreading to others. This benefit to society is the positive externality. However, since individuals do not take this into account when deciding whether or not to get vaccinated, there may be under-provision of vaccinations.

Which of the Following Has a Positive Externality and Hence