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Question

Every year at the beginning of flu season, many people, including the elderly, get a flu shot to reduce their chances of contracting the flu. One result is that people who do not get a flu shot are less likely to contract the flu.

On the graph that follows, show the effects of this externality by drawing in and labeling any additional curves that are needed and by labeling the efficient quantity and the efficient price of flu shots. Label the area representing deadweight loss in this market.

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In this question, we have to describe the effect of externality using the graph given in the question.

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