The purpose of this assignment is to get you to “think like an economist” about the economic logic of policy interventions related to the novel coronavirus. Your task is to use the tools of the course to answer the questions below. For each prompt, there is a specified word limit that you may not exceed. You will be evaluated on the quality of your reasoning and the degree to which you faithfully apply relevant concepts of the course to the hypotheticals listed below.
You may discuss this assignment with other students, but you must answer with language that is completely your own, so do not share any text/sentences/phrases with each other.
Part 1—Vaccines against the coronavirus are currently in scarce supply. In the US, the vaccine is being given to people by priority tiers that depend on occupation and age. Some have argued that it would be more economically efficient to allocate the vaccine by willingness to pay.
Suppose that 80% of the vaccine continued to be distributed according to the current system, but the remaining 20% of the vaccine supply was separately allocated via an auction under which people could bid an amount that they would be willing to pay, and those vaccines would go to the people with the highest bids.
Prompt 1.a (150 word limit, 10 points) Claim: The 20% of vaccines distributed through auction would be allocated in an economically efficient manner from the point of view of society.
Evaluate this claim.
Prompt 1.b (150 word limit, 10 points) Some worry that it would be unfair to allocate vaccines by auction because the rich might get all the vaccines. In response, others suggest that we could randomly allocate permits that give someone the right to get a vaccine as part of the 20% allocation, but they would be able to sell this permit to another person if they wanted. Claim:
The vaccines allocated in this way would be allocated both efficiently and fairly. Evaluate this claim.

DETAILED ASSIGNMENT

20210317032908coronavirus