The market demand for vaccine XYZ is given by P = 36-Q and the supply conditions are P = 20. There is a positive externality associated with being vaccinated, and the real societal value is known and given by P = 36-(1/2)Q.
(a) What is the market solution to this supply and demand problem?
(b) What is the socially optimal number of vaccinations?
(c) If we decide to give the supplier a given dollar amount per vaccination supplied in order to reduce price and therefore increase the number of vaccinations to the social optimum, what would be the dollar value of that per-unit subsidy?