The graph below illustrates the marginal cost, marginal private benefit, and marginal social benefit of being vaccinated against a contagious childhood disease. MB1 measures ______ and MB2 measures ______.

Question

The graph below illustrates the marginal cost, marginal private benefit, and marginal social benefit of being vaccinated against a contagious childhood disease.  MB1 measures ______ and MB2 measures ______.

Quizplus · Accepted Answer

The graph illustrates that the marginal private benefit (MB1) of being vaccinated decreases as the number of vaccinated individuals increases. This is because the vaccinated individual's risk of contracting the disease decreases as more people are vaccinated, thus decreasing the benefit to the individual. On the other hand, the marginal social benefit (MB2) of being vaccinated is overall positive and does not decrease with the number of vaccinated individuals. This is because each vaccinated individual provides a positive externality to society by reducing the likelihood of the disease spreading to others. Therefore, the best answer is C) private demand; social demand, as the graph shows the decreasing marginal benefit to the individual (private demand) and the overall positive marginal benefit to society (social demand).

The Graph Below Illustrates the Marginal Cost, Marginal Private Benefit