In the hypothetical nation of Translandia, the COVID-19 virus has taken a heavy toll on the nation's population. Translandia is, by global standards, a poor nation. Rulers are desperate to get more residents vaccinated against the virus. To make the vaccine more affordable, either consumer purchases (demand) or production (supply) can be subsidized. Consider the following market demand and market supply curves for a generic version of the vaccine: QD = 32-P (Market Demand) Qs = 2 + P/2 (Market Supply) where is output measured in doses of the vaccine (in thousands) per week, and P is the market price in dollars. a. Find the current equilibrium price and quantity in this market. b. Find the equilibrium price and quantity in this market if the government offers a $6.00 per unit subsidy for providers of the vaccine. c. What will happen to the price buyers pay per dose of the vaccine as a result of the subsidy? d. What price will providers actually receive (net price) per dose yard after the subsidy? e. What is the weekly cost of this subsidy to the government? f. Now suppose the government decides on a different policy. Calculate the equilibrium price/output solution after the institution of a voucher system whereby consumers can use a $5.00 voucher to supplement cash payments for the vaccine. g. What will happen to the net price buyers pay per dose of the vaccine as a result of the vouchers? h. What price will providers actually receive per dose after the vouchers? i How much will this system of vouchers cost the government? j. Discuss the differences in these two approaches to helping solve the polio epidemic.

Q&A Education