Question

current objective
understand how subsidies can be a solution to positive externalities and illustrate this graphically
question
why would a government want to provide a subsidy to any citizen who wishes to get vaccinated?
select the correct answer below:
the government is trying to move the market level of output closer to the socially desirable level of output
the government is working to prevent the positive spillovers that often accompany vaccines.
the government is attempting to increase revenue by working with pharmaceutical companies in research and development.
the government is wanting to prevent the socially optimal quantity of vaccinations.

Explanation:

Vaccinations have positive externalities. Without a subsidy, the market level of output (vaccinations) is less than the socially desirable level. A subsidy encourages more people to get vaccinated, moving the market output closer to the socially desirable level. Option 2 is wrong as positive spillovers (external benefits) of vaccines are good and not to be prevented. Option 3 is incorrect as the main goal is not revenue - related. Option 4 is wrong as the government wants to achieve, not prevent, the socially optimal quantity.

Answer:

The government is trying to move the market level of output closer to the socially desirable level of output.