The following graph shows the externalities in the market of inoculation. Apparently, there are positive externalities in consumption of inoculation (vaccine, etc). The Marginal External Benefit is estimated to be a constant $20 for all quantities. 1. Price, Benefit, and Cost (Dollars) 45 30 25 10 W Y U R X S S = MSC D = MPB, 10 12 Inoculations per Year (Millions) i. Explain how we get the MSB from consumers' MPB. ii. Which area is the efficiency loss if the market is not regulated? = MSB

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The following graph shows the externalities in the market of inoculation. Apparently, there are positive externalities in consumption of inoculation (vaccine, etc). The Marginal External Benefit is estimated to be a constant

$20

for all quantities. 1. Explain how we get the MSB from consumers' MPB. ii. Which area is the efficiency loss if the market is not regulated?

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