A recent public health study indicates that the benefits of flu shots extend bey

Question

A recent public health study indicates that the benefits of flu shots extend beyond those enjoyed by direct recipients of the shots. In particular, those who do not get flu shots will likely benefit because their chance of exposure to the flu virus will be reduced when others do get the flu shots. The health study estimates that the external benefits amount to $6 per person. The curve labeled MB shows the private marginal benefits from flu shots. The curve labeled MSB shows the marginal social benefits.

To achieve the socially efficient number of flu shots, what price would suppliers have to receive?

Explanation / Answer

Here the benefit to society is very high, This particular vaccination have positive externality

We clearly see that there is $6 per person so if 1400 people recieve the flu vaccine the net external benefit would be 1400*6= 8400

but users of vacine only need to spend $1400 to get this vaccine,

So at $1 most people will go for vaccine and is highly beneficial.

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