For each policy listed, identify whether it is a command-and-control policy (regulation), tradable permit system, corrective subsidy, or corrective tax.

The market for seasonal flu shots is depicted in the graph. As more people receive flu shots, fewer people catch the flu and potentially pass it on to others. Therefore, the chance of catching the flu decreases for everyone, even those who do not purchase a flu shot. This is an example of a positive externality. The graph contains the private demand curve (D1) and the supply curve. D1 does not take into consideration the social benefit of people getting flu shots. Graph the social demand curve by placing the end points of D2 at the correct locations. Then, indicate the dead weight loss to society by placing the DWL triangle in the correct location on the graph. The Market for Flu Vaccinations D2 (marginal soeial benefit) DWL supply D1 (marginal private benefit) Quantity of flu shots Price ($)

A local school administrator observes an increase in the number of flu cases in the public schools over the last two years. She is concerned that some families cannot afford flu vaccine and are therefore not having children vaccinated. She is also concerned that the failure to vaccinate some children is putting other children at risk, so she proposes that the state subsidize vaccines to increase coverage rates. a. Determine whether the failure to vaccinate some children is an external benefit or an external cost. If an external cost is present, move point A and point B to show the marginal social cost curve. If an external benefit is present, move point A and point B to show the marginal social benefit curve. Place point C at the equilibrium outcome. Place point D at the socially optimal outcome. Flu vaccines A B D Supply (marginal private cost) Price

Which of the following policies could help the government achieve the efficient outcome? Check all that apply. Introduce emission taxes Offer a subsidy to consumers equal to the vertical distance between the marginal private benefit curve and the marginal social benefit curve Implement tradable pollution permits Offer a subsidy equal to the price at the efficient outcome Offer a subsidy to producers equal to the vertical distance between the marginal private benefit curve and marginal social benefit curve