Economics:
10th Edition
ISBN: 9781285859460
Author: BOYES, William
Publisher: Cengage Learning
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Chapter 27, Problem 12E
To determine
To explain:
The best solution to solve positive externality in education is to provide a subsidy and the education system in all countries government entity is to be determined.
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Students have asked these similar questions
Is education a public good? Does education have external benefits? If so, what are some of those public benefits? In your opinion are the external benefits large or small? Why?
What should government do to promote the efficient provision of products that have external benefits? If you think that government should put more resources into education, what might be some of the opportunity costs of that decision? How would an economist determine the right amount of government support for education?
Explain why economists might say that the market for higher education demonstrates externalities and market failure.
What is the difference between the PRIVATE COST and the SOCIAL COST of education?
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- 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? yearsarrow_forwardClassify each statement as a positive externality associated with education or a negative externality associated with education. Positive externalties of education Negative externalities of education Answer Bank a higher voter participation rate reduced welfare dependency an increased standard of living lower crime ratesarrow_forwardExplain the graph that I have provided about the PRIVATE COST and SOCIAL COST of EDUCATION.arrow_forward
- 3. How does the optimal size of the subsidy for education vary with the size of the (positive) consumption externality? Justify your answer graphically.arrow_forwardWhy does government intervention become necessary in the situation of market failure?arrow_forwarda)Some advocates of anti-poverty programs claim that fighting poverty is a public good. Explain what these advocates mean by classifying charity as a public good. b)Why do governments tend to run programs that help the poor? Can the private sector be left to run those programs? Discuss your answer by focusing on externalities and market failurearrow_forward
- Explain the measures used by the government to correct each of the following sources of market failure: (i) demerit goods (ii) Negative externalityarrow_forwardThe table below shows cost data for producing different amounts of higher education. The market for higher education produces positive externalities in the form of more informed voters and higher rates of technological growth. Use the given information to answer the questions below. Price Supply Private Demand Private+Social Demand 63 76 102 15 70 70 96 28 77 64 90 41 84 58 84 54 91 52 78 How much higher education would we expect to be produced in the free market? What is the socially optimal output of higher education? F12 F10 11 F9arrow_forwardIdentify a newspaper article that illustrates a market failure in Barbados. Ensure that you provide a screenshot of the article in your submission. NOTE: Only the following market failures should be examined: public good, asymmetric information, positive or negative externality. Suggest a relevant government policy that would yield the efficient outcome and carefully explain the process through which the implementation of the government policy will lead to the optimal outcome. How will the imposition of the chosen government policy impact consumersurplus, producer surplus and total surplus in this scenario?arrow_forward
- In at least 150 words, answer the questions below. What difficulties occur when government attempt to use Ligurian taxes/ subsidies to address externalities.arrow_forwardExplain the measures used by the government to correct each of the following sourcesof market failure :(i) demerit goods(ii) Negative externality Explain the concept of market failure.arrow_forwardMost 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. The original assumption for Gondolin stated that the marginal private benefit is equal to the marginal social benefit. Now instead assume that the marginal social benefit of tertiary education is greater than the marginal private benefit. That is, assume there is a positive externality associated with having a tertiary education. Draw this in a new figure. Is the deadweight loss from the subsidy increased or decreased with the introduction of the positive externality? Why?arrow_forward
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