Question

The University Health Center receives 500 flu vaccinations at the beginning of each flu season. Suppose they offer these vaccines for $20.00 each. Assume that college students have varying budgets - some have some money to spare, some are on a very tight budget. Some students have pre-existing conditions, such as asthma and diabetes that place them at high risk for the flu.
Suppose the school sells all of the vaccines at this price. What has it managed to achieve? Choose the BEST answer.



Suppose now that the school wishes to make sure no student with diabetes or asthma goes without the drug because they cannot afford it. Because they do not know the budgets of each student, the Health Center decides to offer them free to students who can provide a doctor\'s note stating they have asthma or diabetes. The school is now seeking a greater degree of which of the following?


A.
Productive Efficiency

B.
Equity

C.
Allocative Efficiency

D.
Voluntary Exchange

Answer 1

Answer:

Part 1: Option C ( Allocative Efficiency)

Part 2 : Option D ( Voluntary Exchange)

Step-by-step explanation:

Part 1:

In Part 1 the school has sold all the vaccines at the given price and they will earn at least some thing form the vaccines sold. So this lies in allocative efficiency.

According to definition allocative efficiency is the efficiency  every good or service is produced up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing.

So the answer for the first part is part C

Part 2:

In second part the school has decided to give free medicines to people suffering from Asthma and Flu. So this lies in Voluntary exchange.

According to definition Voluntary exchange is providing of the goods free of cost to the consumers.

So school is providing free of cost vaccines to the students which is voluntary exchange and it is option D