Q 4). The flu vaccination market has the demand and supply curves given by the f
ID: 1094980 • Letter: Q
Question
Q 4). The flu vaccination market has the demand and supply curves given by the following data. (All quantities are in thousands.)The flu vaccination market has the demand and supply curves given by the following data. (All quantities are in thousands.) Price per vaccination $10 $15 $20 $25 $30 Quantity demanded 90 80 70 60 50 Quantity supplied 50 60 70 80 90 Plot the demand and supply curves, and determine the equilibrium price and quantity. Show the areas of consumer and producer surplus. Now suppose that each vaccination given generates an external benefit, as those who do not get vaccinated are less likely to get the flu when others do get vaccinated. As a result, suppliers receive a $10 subsidy from the government for each vaccine. For example, if consumers pay $10 per vaccination, suppliers receive $20, so only $10 from consumers is required to induce suppliers to offer 70,000 vaccinations per month. Plot the new supply curve. Determine the new equilibrium price and quantity. Does the price fall by the full amount of the subsidy? If not, explain why. What is the total amount that consumers now pay for the new equilibrium quantity of vaccinations? What is the total subsidy that suppliers receive from the government at the new equilibrium quantity of vaccinations?
Q 5) The table below shows the total cost of cleaning classrooms:
Classrooms cleaned per evening
0
3
7
12
16
17
Total cost
$100
$200
$300
$400
$500
$600
Q 6) Suppose a rise in fuel costs increases the cost of producing oats by $0.50 per bushel. Illustrate graphically how this change will affect the oat market and a single firm in the market in the short run and in the long run.
Classrooms cleaned per evening
0
3
7
12
16
17
Total cost
$100
$200
$300
$400
$500
$600
Explanation / Answer
Ans 5.
AFC (3) = 100/3
AVC (3) = 100/3
AFC (7) = 100/7
AVC (7) = 200/7
MC (17) = 100
AC (12) = 400/12
Cheers
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