The retiree would have the higher-valued use and the businessman would have the

Question

The retiree would have the higher-valued use and the businessman would have the lower opportunity cost. (Figure: Market for vaccines) Refer to the figure. The figure represents the market for vaccines with external benefits. The market s outcome generates a(n). deadweight loss of approximately $7S0. shortage of 1, 800 vaccines. equilibrium price of $20. All of the answers are correct. A chemical bathroom cleaner has an ingredient X that allows the deaner to lather well and remove stains. The cost of producing a bottle of this bathroom cleaner retails for $5.50. When consumers use the bathroom cleaner, the lather that gets washed down the drain escapes, into the environment and releases allergens that

Explanation / Answer

The market for vaccines generates positive externality.

Market equilibrium price = $12.50

Equilibrium quantity = 1500 units

Socially optimal market equilibrium price = $15

Socially optimal quantity = 1800 units

Deadweight loss = (1/2)*(15-12.5)*(1800-1200) = 750 units.

Thus, option a is correct

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Option b,c and d are not correct because neither is their any shortage of 1800 units (actual shortage = 1800-1500 = 300 units)

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