Question

Assume that the marginal social benefit of the last unit of vaccination provided is greater than the marginal social cost. Which of the following can be used to achieve efficiency in the market for vaccination?Select the correct answer below:a. A per-unit subsidy for vaccinationsb. A lump-sum tax for vaccinationsc. A price ceiling for vaccinationsd. A per-unit tax on vaccinations

Answer 1

The correct answer is letter "A": A per-unit subsidy for vaccinations.

Step-by-step explanation:

A unit subsidy is a certain amount per unit produced given to the manufacturer. This type of subsidy will downturn the supply curve because of the amount of the subsidy. Typically, this is done to decrease the price level and increase the output quantity.

In that case, by creating more output for the vaccinations the marginal cost will be higher which reaches the marginal benefit at a certain point provoking market efficiency for the vaccinations.