The marginal cost of educating a college student is $3,000 a year.The table shows the marginal benefit schedule of a college education. The marginal externalbenefit of a college education is a constant $1,000 per student per year. There are no publiccolleges.With no government involvement in college education, how many students enroll, what is thetuition, and what is the deadweight loss created?With no government involvement in college education,is $ per student per year.million students enroll and tuitionStudents(millions per year)12 3 4 5 6 7 8Marginal benefit(dollars per student per year)5,0003,0002,0001,5001,2001,000800500 The marginal cost of educating a college student is $2,000 a year.The table shows the marginal benefit schedule of a college education. The marginal externalbenefit of a college education is a constant $1,000 per student per year. There are no publiccolleges.If the government subsidizes colleges and sets the subsidy so that the efficient number ofstudents enroll, what is the subsidy per student, how many students enroll, and what is thecost to taxpayers?The subsidy is $per student andmillion students enroll.Students(millions per year)12 3 4 5 6 7 88Marginal benefit(dollars per student per year)5,0003,0002,0001,5001,2001,000800500

Marginal cost is the cost incurred by producers while producing one additional unit of the product,…

Answered: The marginal cost of educating a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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? years
A natural spring runs under land owned by ten people. Each person has the right to sink a well and can take water from the spring at a constant marginal cost of $5 a litre. The table sets out the external cost and the social benefit from water. Quantity of water (litres per day) 10 20 30 40 50 60 70 Marginal external cost 1 2 3 4 5 6 7 Marginal social benefit (dollars per litre) 10 9 8 Draw the marginal cost curve. Label it. Draw the marginal social benefit curve. Label it. Draw the marginal social cost curve. Label it. 7 6 5 4 The government sets a quota on the total amount of water such that the spring is used efficiently. Draw a line to show this quota. Label it. C 14- 12- 10- 8- 6- 4. 2- Price and cost (dollars per litre) 0+ 0 10 20 30 40 50 60 70 80 Quantity of water (litres per day) >>> Draw only the objects specified in the question.
Price and cost (dollars per unit) Curve I Curve 2 Quantity (units per day) Which of the following statements is true? When producing D cans of paint, the distance CD represents the marginal cost. O When producing D cans of paint, the distance CD represents the marginal social cost. When producing L cans of paint, the distance AB represents the marginal external cost. Which of the following statements is true? When producing D cans of paint, the distance CD represents the marginal When producing D cans of paint, the distance CD represents the marginal cost. When producing D ca s of paint, the distance AB represents the margina external cost. Curve 2 represents the marginal external cost. None of the above.
in the town of Externalia, vaccination programs create additional benefits to the community, beyond the consumers who actually purchase vaccinations The graph on the right shows the market for vaccinations 11 Using the line drawing tool, show a ine representing the true demand for vaccinations, if the external benefit were taken into account Label your line D 2) Using the point drawing tool show the new equibrium price and quantity Label your point E Carefully follow the instructions above, and only draw the required objects Price (5) Qo Quantity of vaccinations (housands)
Some economists claim that early child care generates an external benefit to society. a. What is the market equilibrium? What is the socially optimal outcome? How do they differ? b. The government is planning to provide a per-unit subsidy for child care to achieve the socially optimal outcome. How large should this subsidy be? c. How much is the total government subsidy each month to reach a socially optimal outcome?
Consider the market for fire extinguishers. d. If the external benefit is $10 per extinguisher,describe a government policy that would yield theefficient outcome.
The effect of external costs on the efficient level Consider the market for steel. Suppose that a steel manufacturing plant dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the plant. Producing an additional ton of steel imposes a constant external cost of 5330 per ton. The foliowing graph shows the demand (private value) curve and the supply (private cost) curve for steel.
The following question refers to the diagram below, which illustrates the marginal private cost, marginal social cost, and marginal social benefits for a goods whose production results in a negative externality. Which area represents the deadweight loss due to the externality? A j. Bh. C h+j. D There is no deadweight loss. $ g MSC MPC k m MSB Q2 Q1
The weekly supply and demand for packs of cigarettes in the United States is given in the figure below. Price $36 $34 $32 $30 $28 $26 $24 $22 $20 $18 $16 $14 $12 $10 $8 $6 $4 $2 0 2768 14 S=MC-MC pvt Packs of cigarettes (millions) social MB pvt Tools 7 MB social a. Suppose cigarette smoking causes a $6 per pack external cost on nonsmokers. Draw the social benefit curve that accounts for the external cost associated with smoking. Instructions: Use the tool provided 'MBsocial' and plot only the endpoints such that the first point touches the vertical axis and the second point touches the horizontal axis. b. Assuming the externality associated with smoking is not faced by consumers, week. c. The efficient number of cigarette packs is: million packs. million packs of cigarettes are consumed per
The table gives information about the marginal benefit and marginal cost of a trade school education. What is the value of the voucher that the government must provide to result in the efficient number of trade school students enrolled? The efficient number of trade school students will enroll if the government provides vouchers worth $ per student per year. >>> Remember that the amounts in the table are given in thousands of dollars. Marginal social Quantity Marginal (thousands private benefit benefit of students per year) 1 2 3 4 5 (thousands of dollars per student per year) 10 9 8 7 6 3219 11 Marginal cost 10 9 10 10 10 10 2999 10
2. Table: The following table shows the private value, private cost, and social value for a market with a positive externality. Quantity Private Value Private Cost Social Value 27 6 34 12 24 10 31 13 21 14 28 14 18 18 25 15 15 22 22 12 26 19 a. What is the market equilibrium quantity of output for this product? b. What is the socially-optimal level of output in this market? c. How large would a per unit subsidy need to be in this market to move the market from the equilibrium level of output to the socially-optimal level of output?
What is this graph and what are some issues with it? 20 18 16 - 14 12 - 10 8 - 6 - 4 2- 1960 Year O. Externality graph over time. Issues are that it is in percentage, so does not show how much 'pollution' there is, also does not include taxes which reduce high pollution or benefits which decrease pollution. O U.S. Poverty graph over time. Issues are that it is in percentage, so does not show how 'rich' the richest are, also does not include taxes which increase high income or benefits which decrease poor income. O HHI Index graph over time. Issues are that it is in percentage, so does not show how much monopoly is in dollars, also does not include taxes which reduce monopoly income or benefits which increase monopoly income. OMU.S. Poverty graph over time. Issues are that it is in percentage, so does not show how 'poor' the poorest are, also does not include taxes which reduce high income or benefits which increase poor income. Percentage of People Below the Poverty Line 1965 1970 1975…

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