The table below describes the market for higher education. Higher education confers positive externalities on society, and so the private+social marginal benefits are higher than the private marginal benefits. Quantity 10,000 11,000 12,000 13,000 14,000 Calculate the value of the subsidy that society would need to allocate to higher education in order to achieve the social equilibrium. Express your answer without units (i.e., if your answer is "$500", type "500" in the answer box). Private marginal benefits $80,000 $75,000 $70,000 $65,000 $60,000 A Private+ social marginal benefits $90,000 $85,000 $80,000 $75,000 $70,000 Marginal costs $70,000 $75,000 $80,000 $85,000 $90,000

The table below describes the market for higher education. Higher education confers positive externalities on society, and so the private+social marginal benefits are higher than the private marginal benefits. Quantity 10,000 11,000 12,000 13,000 14,000 Calculate the value of the subsidy that society would need to allocate to higher education in order to achieve the social equilibrium. Express your answer without units (i.e., if your answer is "$500", type "500" in the answer box). Private marginal benefits $80,000 $75,000 $70,000 $65,000 $60,000 A Private+ social marginal benefits $90,000 $85,000 $80,000 $75,000 $70,000 Marginal costs $70,000 $75,000 $80,000 $85,000 $90,000

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter27: Markets And Government

Section: Chapter Questions

Problem 12E

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Explain why economists might say that the market for higher education demonstrates externalities and market failure.
3. How does the optimal size of the subsidy for education vary with the size of the (positive) consumption externality? Justify your answer graphically.
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
If education has private benefits to an individualas well as external benefits to society, explain whya less-than-optimal amount of education occurs.
The figure below shows the market for higher education. The market demand curve for higher education reflects only the marginal private benefit (MPB) that individuals receive. Since this is a market with positive externalities, suppose the government provides a subsidy to consumers of higher education (students) that is equal to the marginal social benefit (MSB) minus the marginal private benefit (MPB), in this case, $8, 000 per student. With the subsidy, the demand curve will shift and become the same as the marginal social benefit (MSB) curve. Move the demand curve below to illustrate this shift. Be sure to take the exact size of the subsidy into account. Precise answers are required. Provide your answer below: 18 16 14 S(MPC) 10 -8 O Market Equilibrium (800,8) Social Equilibrium (800,8) -6 -4- 2- D(MPB) 16001800 1000 1200 Quantity (in thousands of college degrees) -200 0 200 400 600 800 1400 -2 Price (in thousands of $)
The table below than the private marginal benefits. Quantity Private+ social marginal benefits 10,000 $90,000 11,000 $85,000 12,000 $80,000 13,000 $75,000 14,000 $70,000 Calculate the value of the subsidy that society would need to allocate to higher education in order to achieve the social equilibrium. Express your answer without units (i.e., if your answer is "$500", type "500" in the answer box). Type your answer... 2 D6 W S 3 O E D Market for higher higher education. Higher education confers positive externalities on society, and so the private+social marginal benefits are higher Q $ 4 = R F Private marginal benefits $80,000 $75,000 $70,000 $65,000 $60,000 % 5 C T G 6 A MacBook Pro Y H & 7 U D W * 00 8 J P 4 1 ( 9 K cricut O ) 0 Marginal costs $70,000 $75,000 $80,000 $85,000 $90,000 L P T + 11 13 { Next O L 11 ?
Which of the following is a negative externality connected to attending college? A) The fact that completion of a college degree acts as a signaling mechanism to employers. B) The fact that other costs, such as books and materials, are incurred in addition to tuition and fees. C) The fact that your college has required that all individuals living in student housing either get or show they have already obtained vaccinations against all communicable diseases. D) The fact that the people in the next room play loud music at hours you want to sleep. E) The fact that you will get benefits from college that you don't currently anticipate.
Education confers many external benefits on society: a higher-paid workforce, more technological innovation, a more informed electorate, and so on. Therefore, the market equilibrium quantity of education is not equal to the socially optimal quantity. The following graph shows the demand for education (its private value), the supply of education (the private cost of producing it), and the social value of education, including both the private value and external benefits. Use the black point (plus symbol) to indicate the market equilibrium quantity. Next, use the purple point (diamond symbol) to indicate the socially optimal quantity.
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The 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 F9
With the aid of examples or illustrations, show how cost-benefit analysis is linked to the following two welfare economic theory Externalities