Final answer:
Imposing a Pigouvian subsidy in a market with a positive externality such as flu vaccinations increases the total surplus by aligning the marginal social benefit with the marginal private benefit and thus achieving the socially optimal quantity of QSocial.
Step-by-step explanation:
When a Pigouvian subsidy is imposed on a market with a positive externality, total surplus increases. This kind of subsidy is given by the government to encourage consumption that has additional societal benefits. Taking the example of flu vaccinations, which have spillover benefits, the marginal social benefit of getting a flu shot exceeds the marginal private benefit. Without the subsidy, the market would only provide QMarket vaccinations, leading to an inefficient outcome. By providing a subsidy equal to the difference between the marginal social benefit and marginal private benefit, the socially optimal quantity of flu vaccinations, QSocial, can be achieved. This causes the total surplus, which is the sum of consumer surplus and producer surplus, to be maximized, eliminating the deadweight loss that occurs when the market is left to operate on its own.