University presidents around the country have convinced the Congress tosupport an educational program that will allow students to attend anycollege in the US they want (and can get into even SAIS!) for only $15,000in annual tuition and living expenses. This program would generate $45,000in extra after-tax earnings. The rest of society - i.e., taxpayers, pays costsof $25,000 in scholarship costs per student but receives only $12,000 indiscounted added tax revenues.a. Would this program pass the Hicks-Kaldor economic efficiency test?b. Is this the right test to use?c. Regardless of the answers to (a) and (b), is this a program that you, as aSAIS student, would support? Why yes or no?

a. No, this program would not pass the Hicks-Kaldor economic efficiency test. The Hicks-Kaldor…

a. Would this program pass the Hicks-Kaldor economic efficiency test? b. Is this the right test to use? c. Regardless of the answers to (a) and (b), is this a program that you, as a SAIS student, would support? Why yes or no?

a. Would this program pass the Hicks-Kaldor economic efficiency test? b. Is this the right test to use? c. Regardless of the answers to (a) and (b), is this a program that you, as a SAIS student, would support? Why yes or no?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter12: The Partial Equilibrium Competitive Model

Section: Chapter Questions

Problem 12.10P

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Question

University presidents around the country have convinced the Congress to
support an educational program that will allow students to attend any
college in the US they want (and can get into even SAIS!) for only $15,000
in annual tuition and living expenses. This program would generate $45,000
in extra after-tax earnings. The rest of society - i.e., taxpayers, pays costs
of $25,000 in scholarship costs per student but receives only $12,000 in
discounted added tax revenues.
a. Would this program pass the Hicks-Kaldor economic efficiency test?
b. Is this the right test to use?
c. Regardless of the answers to (a) and (b), is this a program that you, as a
SAIS student, would support? Why yes or no?

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