Problem
Inoculations create external benefits by reducing other people's exposure to communicable diseases. Suppose the market demand curve for inoculations is Qd = 100 - 10P, where Qd is millions of inoculations and P is the price per inoculation. Suppose also that the market for inoculations is competitive and that the market supply curve is Qd = 2P - 8. Finally, suppose that the marginal external benefit of inoculations is MEB = 8 + 1.5Q. Find the socially efficient level of innoculations, the competitive equilibrium, the deadweight loss created by the externality, and the optimal Pigouvian subsidy. Draw a figure to illustrate your answer.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.