Micro 6.4 Positive Externalities- ACDC Econ

The video discusses market failures, focusing on positive externalities using the example of flu shots. It explains how the free market fails to produce the allocatively efficient quantity due to unaccounted social benefits. The video illustrates the demand and supply curves, highlighting the difference between private and social benefits. It identifies the problem of underproduction and suggests government subsidies as a solution to achieve optimal production levels.

Discuss the implications of not factoring in external benefits when determining the demand for flu shots.

How can government intervention help to correct market failures related to flu shots?