Final answer:
A person typically pays for the private value of a flu shot but should ideally pay for both the private and social value, considering that flu shots produce a positive externality, benefiting not only the individual but society as a whole.
Step-by-step explanation:
The question concerns the economic concept of externalities and market efficiency in the context of flu vaccinations. A person who gets a flu shot typically pays for the private value of the flu shot. However, when considering the provided market model for flu shots, the answer to the question would be: b) Both the private and social value of the flu shot. This is because flu shots create a positive externality, meaning they not only benefit the individual receiving the shot but also society as a whole by reducing the spread of the flu.
In the described market model, the demand curve reflects only the marginal private benefits (MPB) that individuals receive, while the supply curve reflects the marginal private cost (MPC) of producing the vaccinations. Nonetheless, the presence of positive externalities, represented by the marginal social benefit (MSB), illustrates that there is an additional social value to flu shots beyond the private value. Thus, ideally, consumers should consider both the private and social benefits when deciding to pay for a flu shot to achieve the socially optimal level of vaccination (QSocial), which is higher than the market equilibrium level (QMarket), and compensate for the market's failure to recognize the positive externality.