Consider the education market of a country which is perfectly competitive. The demand equation for education is given by P = 14 - 2Q and the supply equation of education is given by P = 2 + Q.   (i) Assume that education is able to generate a positive external benefit of 3 per unit. Examine the education market and explain why the market is inefficient. Compute the deadweight loss and support your answers with an education market diagram.   (ii) What should the government do to restore efficiency in the education market. Explain.

Using the supply/demand model, illustrate and explain the impact a severe outbreak of the avian flu would have in the market for poultry.

These two situations have arisen: Agricultural technologies become available that if used reduce adverse effects fromfarming on environmental quality   Water from a uranium mine is leaking into Kakadu NationalPark   For each case you are to identify possible external effects that might occur and explain the conditions that would need to exist, and what the government or the affected parties could do, to change these negative situations for the betterment of one or both parties?

The supply and demand curves for bananas are as follows:        QD = 3,750 - 725P       QS = 920 + 690P              where Q = millions of bushels and P = price per bushel.   a) Calculate the equilibrium price and quantity that would prevail in the free market. b) The government has imposed a $2.80 per bushel support price. How much bananas will the government be forced to purchase? c) Calculate the change (gain/loss) in consumer surplus that would occur due to the support program. Does the consumer surplus increase or decrease under the program?

Most countries today have subsidised the provision of education. Consider an imaginary country, Gondolin. Gondolin pays a subsidy of $10 000 per year to each student enrolled in tertiary education.(a) Depict, with the help of a figure, the initial market for tertiary education in Gondolin, assume that: 1) education was left to the competitive free market; 2) the marginal private benefit is equal to the marginal social benefit; 3) the marginal private cost is equal to the marginal social cost. Now describe, using the help of the figure, the effect of the government subsidy on the price and quantity traded of tertiary education, where the X axis of the figure should be the quantity of students enrolled in tertiary education. You do not need to use actual numbers – focus on the direction of change in price and quantity traded caused by the subsidy.(b) Identify the area of the figure you drew in (a) that depicts the total size of the subsidy paid by the government to the students enrolled…

Which of these is not an example of a market failure: Group of answer choices there is only one seller of internet access in a community. your next door neighbor plays music at night that wakes you up. the price of gas increases. No answer text provided.

Policymakers realize that, although education creates a positive benefit for those who obtain it, it also creates external benefits for the community where the educated individual resides. The graph depicts the marginal social cost (MSC) and the marginal social benefit (MSB) associated with education. On the graph, move the point, P, to the point representing the optimal level of education. Dollars (thousands) 100 90 80 70 60 50 40 30 20 10 0 0 2 4 MSC MSB 6 8 10 12 14 16 18 20 22 Years of schooling optimal schooling: 14 What is the socially optimal number of years of schooling for each citizen? years

Explain the concept of externalities; include an example, as well as how the government takes action to correct it.

The following diagram shows the market for medical checkup.   What are the equilibrium price and quantity of medical checkup?  Which kind of externality problems exists in the market for medical checkup? How does this externality problem affect the efficiency of the market? Explain in detail.  How can the government solve this externality problem? Explain in detail.

In this plot we model a possible scenario for Australia's energy market. On the horizontal axis we have the quantity of energy, and on the vertical axis its price. Pa Demand (private value) Pb Supply (private cost) Pc Social Value Social Cost ---- Qа Qb Qc If there were no externalities the welfare maximizing quantity would be [ Select ] , while [ [ Select ] v would reflect the true benefit and cost to society. However, this model describes the presence of a [ Select ] externality in [ Select ] Therefore, the welfare maximizing quantity is [Select] and the deadweight loss is [ Select ] If the externality was fully internalized through a corrective tax equal to [ Select ] then the new market price would be [ Select ] the new market quantity would be [ Select ] V and society's welfare would be [ Select ] v without the corrective tax.