Questions: Flu shots and other goods with external benefits generate a deadweight loss because: some units for which the cost exceeds the value are produced. some units for which the value exceeds the cost are produced. some units for which the cost exceeds the value are not produced. some units for which the value exceeds the cost are not produced.

The answer is the last one: some units for which the value exceeds the cost are not produced.

Explanation for each option:

1. Some units for which the cost exceeds the value are produced.

   • This statement is incorrect. If the cost of producing a unit exceeds its value, it would not be produced in an efficient market. This situation does not describe the deadweight loss associated with goods that have external benefits.

2. Some units for which the value exceeds the cost are produced.

   • This statement is incorrect. If the value of a unit exceeds its cost, producing it would be efficient and beneficial. This does not describe a deadweight loss situation.

3. Some units for which the cost exceeds the value are not produced.

   • This statement is correct but irrelevant to the context of external benefits. It describes a situation where production is avoided because it would be inefficient, which does not contribute to deadweight loss.

4. Some units for which the value exceeds the cost are not produced.

   • This statement is correct. In the context of goods with external benefits, such as flu shots, the market may fail to produce enough of these goods because the private market does not account for the external benefits to society. As a result, some units that would provide more value than their cost are not produced, leading to a deadweight loss.

Summary: The deadweight loss in the context of goods with external benefits, like flu shots, occurs because the market fails to produce enough of these goods. This results in some units that would provide more value than their cost not being produced.