Assume that the marginal benehts to society of higher education are greater than the marginal private benefits, as shown in the graph below. What type of policy would likely be an efficient way to resolve the externality? Price Marginal Benefit = S=PMC MB Deadweight Loss with Externality Social Margina SMB =PMB + D= PMB Q, Quantity Underconsumption: Q1
Assume that the marginal benehts to society of higher education are greater than the marginal private benefits, as shown in the graph below. What type of policy would likely be an efficient way to resolve the externality? Price Marginal Benefit = S=PMC MB Deadweight Loss with Externality Social Margina SMB =PMB + D= PMB Q, Quantity Underconsumption: Q1
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter30: Market Failure: Externalities, Public Goods, And Asymmetric Information
Section: Chapter Questions
Problem 8QP
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![Assume that the marginal benefits to society of higher education are greater
than the marginal private benefits, as shown in the graph below. What type
of policy would likely be an efficient way to resolve the externality?
Price
Marginal
Benefit =
MB
S=PMC
Deadweight Loss with
Externality
Social Margina
SMB =PMB +
D= PMB
Q,
Q2
Underconsumption: Q1<Q2
Quantity
Subsidy to consumers
Subsidy to producers
Tax on consumers
Tax on producers](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff0599089-0b3b-431f-8fc2-04ffe90db4ce%2Fe74ec229-d396-46d7-ba26-b6e5ab18ed0c%2Fa508a4h_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Assume that the marginal benefits to society of higher education are greater
than the marginal private benefits, as shown in the graph below. What type
of policy would likely be an efficient way to resolve the externality?
Price
Marginal
Benefit =
MB
S=PMC
Deadweight Loss with
Externality
Social Margina
SMB =PMB +
D= PMB
Q,
Q2
Underconsumption: Q1<Q2
Quantity
Subsidy to consumers
Subsidy to producers
Tax on consumers
Tax on producers
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