The Demand for Injections to Immunize Against a Disease Is

Essay

The demand for injections to immunize against a disease is given as:
P = 13 0.0005Q,
where P = price in dollars, and Q = quantity measured as number of shots per month. The marginal social benefit function has the same vertical intercept as the demand curve and one half the slope (one half in absolute value). The marginal cost of injections is a constant $8.
a. With a competitive market, what price and quantity will prevail, assuming that there is no government intervention?
b. Explain why the demand curve and marginal social benefit functions are different in this case. What is the socially optimal quantity in the market?
c. What government policies could be used to bring about the optimal outcome?