Suppose that the marginal private benefit of a new vaccine could be measured as $M P B = 10 - Q$ . Suppose that the marginal social benefit could be measured as $M S B = 12 - Q$ . Suppose that the private marginal cost curve could be measured as $M P C = Q$ . What quantity represents the optimal societal consumption of the vaccine?

Question

Quizplus · Accepted Answer

To determine the optimal societal consumption of the vaccine, we need to find the quantity where marginal social benefit (MSB) equals marginal social cost (MSC).
First, we need to find the equation for marginal social cost (MSC). Since this is a private good, the marginal cost equals the supply curve, which is given by the marginal private cost (MPC) equation. Therefore, MSC = MPC = Q.
Set MSB = MSC:
12 - Q = Q
12 = 2Q
Q = 6
Therefore, the optimal societal consumption of the vaccine is 6 units.

Suppose That the Marginal Private Benefit of a New Vaccine MPB=10−QM P B = 10 - QMPB=10−Q

Suppose That the Marginal Private Benefit of a New Vaccine $M P B = 10 - Q$