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2. Efficiency in the presence of externalities 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. (?) Supply (Private Cost) + Market Equilibrium ◆ Socially Optimal Level PRICE OF EDUCATION PF ostly cloudy Social Value I CI D

2. Efficiency in the presence of externalities 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. (?) Supply (Private Cost) + Market Equilibrium ◆ Socially Optimal Level PRICE OF EDUCATION PF ostly cloudy Social Value I CI D

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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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. (?) Supply (Private Cost) Market Equilibrium Socially Optimal Level PRICE OF EDUCATION cloudy F2 Demand (Private Value) QUANTITY OF EDUCATION F3 0+ F4 Social Value F5 O F6 F7 F8 F9 Ca F10 O F11 F12 Fn Inse
Transcribed Image Text: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. (?) Supply (Private Cost) Market Equilibrium Socially Optimal Level PRICE OF EDUCATION cloudy F2 Demand (Private Value) QUANTITY OF EDUCATION F3 0+ F4 Social Value F5 O F6 F7 F8 F9 Ca F10 O F11 F12 Fn Inse
2. Efficiency in the presence of externalities 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. (?) Supply (Private Cost) Market Equilibrium ◆ Socially Optimal Level PRICE OF EDUCATION PF ostly cloudy F2 8- F3 -Ö+ Social Value F5 F4 CO F6 I' F7 다 F8 F9 C F10 O F11 28 F12 2 Fn Lock X Ins Pu
Transcribed Image Text:2. Efficiency in the presence of externalities 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. (?) Supply (Private Cost) Market Equilibrium ◆ Socially Optimal Level PRICE OF EDUCATION PF ostly cloudy F2 8- F3 -Ö+ Social Value F5 F4 CO F6 I' F7 다 F8 F9 C F10 O F11 28 F12 2 Fn Lock X Ins Pu
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