Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Question
Chapter 17, Problem 7SPA
To determine
Efficient number of student.
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B. The figure below shows the market for education.
20
S- MSC:
12
MSE
D- MD
2
4
10
Quantity (millions of students per yeorl
i.
'Education has externalities'. Explain this statement.
ii.
If the market is competitive and left unregulated, how many students will be enrolled
per year? Are the resources allocated efficiently when such number of students are
enrolled per year? Explain using the graph above.
iii.
In the figure above, what kind of government intervention is required to achieve the
optimal or efficient number of students? What is the optimal number of students? How
much intervention needed to achieve the optimal number of students?
luian arc cost lihousa-cs of delan per stdent
This graph represents the tobacco industry.
IPrice
16
14
Social Cost
12
10
Private Cost
8
6
4
Demand
200
500 650
Quantity
a) Without any government intervention, what is the market determined price and quantity?
b) What is the price of the externality?
c) What is the socially optimal price and quantity?
d) What should the government do (impose a tax or provide a subsidy) to internalize this externality? What is the amount of the the corrective tax/subsidy needed to be to move the outcome from the
market equilibrium to the socially-optimal outcome?
Refer to Figure. The graph represents a market in which
24
22
22
Price
18
16
81
Social cost (private cost
and external cost)
Supply
(private cost)
Demand
(private valne)
120
160
Quantity
a. Othere is no externality.
b. Othere is a positive externality.
c. Othere is a negative externality.
d. The answer cannot be determined from inspection of the graph.
Chapter 17 Solutions
Macroeconomics
Ch. 17.1 - Prob. 1RQCh. 17.1 - Prob. 2RQCh. 17.2 - Prob. 1RQCh. 17.2 - Prob. 2RQCh. 17.2 - Prob. 3RQCh. 17.2 - Prob. 4RQCh. 17.3 - Prob. 1RQCh. 17.3 - Prob. 2RQCh. 17.3 - Prob. 3RQCh. 17.4 - Prob. 1RQ
Ch. 17.4 - Prob. 2RQCh. 17.4 - Prob. 3RQCh. 17.4 - Prob. 4RQCh. 17 - Prob. 1SPACh. 17 - Prob. 2SPACh. 17 - Prob. 3SPACh. 17 - Prob. 4SPACh. 17 - Prob. 5SPACh. 17 - Prob. 6SPACh. 17 - Prob. 7SPACh. 17 - Prob. 8SPACh. 17 - Prob. 9SPACh. 17 - Prob. 10APACh. 17 - Prob. 11APACh. 17 - Prob. 12APACh. 17 - Prob. 13APACh. 17 - Prob. 14APACh. 17 - Prob. 15APACh. 17 - Prob. 16APACh. 17 - Prob. 17APACh. 17 - Prob. 18APACh. 17 - Prob. 19APACh. 17 - Prob. 20APACh. 17 - Prob. 21APACh. 17 - Prob. 22APACh. 17 - Prob. 23APACh. 17 - Prob. 24APACh. 17 - Prob. 25APACh. 17 - Prob. 26APACh. 17 - Prob. 27APACh. 17 - Prob. 28APACh. 17 - Prob. 29APACh. 17 - Prob. 30APA
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