The attached figure indicates the initial market for tertiary education in a country that pays a subsidy of $10 000 per year to each student enrolled in tertiary education. iI is assumed that assume that: 1) education was left to the competitive free market; 2) the marginal private benefit is equal to the marginal social benefit; 3) the marginal private cost is equal to the marginal social cost. Identify the area of the figure that depicts the total size of the subsidy paid by the government to the students enrolled in tertiary education. Who gains and who loses from such a subsidy?
The attached figure indicates the initial market for tertiary education in a country that pays a subsidy of $10 000 per year to each student enrolled in tertiary education. iI is assumed that assume that:
1) education was left to the competitive free market;
2) the marginal private benefit is equal to the marginal social benefit;
3) the marginal private cost is equal to the marginal
Identify the area of the figure that depicts the total size of the subsidy paid by the government to the students enrolled in tertiary education. Who gains and who loses from such a subsidy?
The equilbrium price and quantity of a good sold in the market are determined by the forces of demand and supply. The equilbrium occurs at the point where the quantity demanded is equal to the quantity supplied.
The changes in the demand and supply can result in changes in equilbrium price and quantity. For example, an increase in the demand with the supply remaining the same will result in an increase in the equilbrium price and quantity.
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