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The coronavirus pandemic has raised questions about how policy makers should respond to future viral...

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Accounting

The coronavirus pandemic has raised questions about how policy makers should respond to future viral pandemics in order to promote an efficient use of society's resources in the face of competing wants (e.g., promoting public health while also producing other goods and services that consumers want and that keep workers employed and earning income. Please answer the questions below with the understanding that physical contact between people increases the likelihood of a Covid-type virus spreading and endangering public health. (For further information, please read the Wall Street Journal article titled "Governments Zero In On an Essential Ratio" (April 21, 2020)).

Explain in words and show in your graph the "spillover cost" that occurs if people supply labor (S) but increase the spread of a Covid-type virus by going to work. That is, draw in your graph a curve that shows the additional social costs of people going to work and label MSC (representing the Marginal Social Costs of people going to work).

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