Figure 7-1

Figure 7-1 represents the market for vaccinations. Vaccinations are considered a benefit to society, and the figure shows both the marginal private benefit and the marginal social benefit from vaccinations.
-Refer to Figure 7-1.At the market equilibrium, the deadweight loss is equal to

Question

Figure 7-1
  
Figure 7-1 represents the market for vaccinations. Vaccinations are considered a benefit to society, and the figure shows both the marginal private benefit and the marginal social benefit from vaccinations.
-Refer to Figure 7-1.At the market equilibrium, the deadweight loss is equal to

Quizplus · Accepted Answer

At the market equilibrium, the quantity demanded and quantity supplied of vaccinations are both 5 million. However, the marginal social benefit of vaccinations is greater than the marginal private benefit at this quantity, resulting in a deadweight loss. The area of the deadweight loss triangle is equal to 0.5 x (10 million - 5 million) x (8 - 6) = 0.5 x 5 million x 2 = $5 million. Therefore, the deadweight loss at the market equilibrium is $500,000, which is represented by the shaded triangle in the figure.

Figure 7-1 Figure 7-1 Represents the Market for Vaccinations. Vaccinations Are Considered