Explain why each of the following statements is True, False, or Uncertain according to economic principles.
Use diagrams where appropriate. Unsupported answers will receive no marks. It is the explanation that is important.
1. The Ontario government now provides (pays for) influenza vaccinations free to all residents who want them.
This policy will result in less deadweight loss in the flu shot market than private purchases of “flu” shots.
[Hints: Assume that the flu is highly contagious and that the vaccination supply curve is perfectly elastic.]
2. Pollution emissions are a “bad”. Therefore the efficient level of emissions is zero.