Recently the FDA approved a vaccine for HPV manufactured by Merck Co. and will likely approve a similar vaccine made by GlaxoSmithKline this year.

1.    Recently the FDA approved a vaccine for HPV manufactured by Merck Co. and will likely approve a similar vaccine made by GlaxoSmithKline this year. (HPV is a virus that causes most cases of cervical cancer in women.) Currently there is a huge debate in several states over requiring the vaccine for girls by age 12.   

a)             What kind of market failure would support this regulation? (Hint: Think about public goods, externalities and google "herd immunity"). Explain.

b)             What kind of government failures could result? Explain.

2. Illustrate each of the following events using a demand and supply diagram for bananas (use a separate S/D graph for each part).  You should show the initial equilibrium, then clearly indicate which curve you shift in which direction and why.

 Explain why you shifted the curve(s) you did.

a. Reports surface that the fruit is infected with a deadly virus

b.Consumers income drops

c. the price of bananas falls

d. The price of organes fall

ee consumers expect the price of bananas to fall sometime in the future.