Figure 5-3 Figure 5-3 shows the market for measles vaccinations,a product whose use generates positive externalities.
-Refer to Figure 5-3.What is the economically efficient output level?

Question

Figure 5-3  Figure 5-3 shows the market for measles vaccinations,a product whose use generates positive externalities.
-Refer to Figure 5-3.What is the economically efficient output level?

Quizplus · Accepted Answer

The economically efficient output level is where the marginal social benefit (MSB) equals the marginal social cost (MSC), which is shown as Q₂. This is because vaccines generate positive externalities, meaning that the benefits to society are greater than the private benefits to individuals. Therefore, society would benefit from a higher quantity of vaccinations than the market would naturally provide. The economically efficient output level would result in a surplus of benefits to society, which is represented by the shaded area between MSB and MPB to the right of Q₂.

Figure 5-3 Figure 5-3 Shows the Market for Measles