Figure 5-6
Chicken pox vaccinations for toddlers benefit society by protecting young children and by preventing an epidemic of the disease. Thus, the social benefits of chicken pox vaccinations exceed the private benefit for any quantity of vaccinations as illustrated in Figure 5-6.
-Refer to Figure 5-6.One way to obtain the economically efficient amount of chicken pox vaccinations is for governments to subsidize these vaccinations.What is the size of the per-vaccination Pigovian subsidy that the government must provide to internalize the external benefits?

Question

Figure 5-6 
 Chicken pox vaccinations for toddlers benefit society by protecting young children and by preventing an epidemic of the disease. Thus, the social benefits of chicken pox vaccinations exceed the private benefit for any quantity of vaccinations as illustrated in Figure 5-6.
-Refer to Figure 5-6.One way to obtain the economically efficient amount of chicken pox vaccinations is for governments to subsidize these vaccinations.What is the size of the per-vaccination Pigovian subsidy that the government must provide to internalize the external benefits?

Quizplus · Accepted Answer

The government must provide a per-vaccination Pigovian subsidy of (PE - PG) to internalize the external benefits. This is because the external benefit is the difference between the social benefit of vaccination (PE) and the private benefit of vaccination (PG).

Figure 5-6 Chicken Pox Vaccinations for Toddlers Benefit Society by Protecting