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The table below descr Fret for higher education. Higher education confers positive externalities on society, and so the private+social marginal benefits are highe than the private marginal benefits. Quantity Private marginal benefits Private+ social marginal benefits 10,000 $80,000 $90,000 Marginal costs $70,000 11,000 $75,000 $85,000 12.000 $70,000 $80,000 13,000 $65,000 $75,000 14,000 $60,000 $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... $75,000 $80,000 $85,000 $90,000 Next

The table below descr Fret for higher education. Higher education confers positive externalities on society, and so the private+social marginal benefits are highe than the private marginal benefits. Quantity Private marginal benefits Private+ social marginal benefits 10,000 $80,000 $90,000 Marginal costs $70,000 11,000 $75,000 $85,000 12.000 $70,000 $80,000 13,000 $65,000 $75,000 14,000 $60,000 $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... $75,000 $80,000 $85,000 $90,000 Next

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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**Understanding the Market for Higher Education** 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 | Private Marginal Benefits | Private + Social Marginal Benefits | Marginal Costs | |----------|---------------------------|-----------------------------------|-----------------| | 10,000 | $80,000 | $90,000 | $70,000 | | 11,000 | $75,000 | $85,000 | $75,000 | | 12,000 | $70,000 | $80,000 | $80,000 | | 13,000 | $65,000 | $75,000 | $85,000 | | 14,000 | $60,000 | $70,000 | $90,000 | **Explanation of the Table:** - **Quantity**: The number of individuals receiving higher education. - **Private Marginal Benefits**: The additional benefit received by the individuals per unit of higher education. - **Private + Social Marginal Benefits**: The sum of the private marginal benefits and the additional benefits to society from each extra unit of higher education. - **Marginal Costs**: The additional cost of providing one more unit of higher education. **Example Calculation:** 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). [Input box for answer] This exercise helps illustrate the external benefits of education and the role of subsidies to align private incentives with social optimal outcomes. **Instructions for Students:** 1. Examine each row to understand the trade-offs between marginal benefits and marginal costs. 2. Consider how subsidies might align the private marginal benefits with the social marginal benefits. 3. Calculate the required subsidy to balance marginal costs with the combined marginal benefits for social equilibrium.
Transcribed Image Text:**Understanding the Market for Higher Education** 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 | Private Marginal Benefits | Private + Social Marginal Benefits | Marginal Costs | |----------|---------------------------|-----------------------------------|-----------------| | 10,000 | $80,000 | $90,000 | $70,000 | | 11,000 | $75,000 | $85,000 | $75,000 | | 12,000 | $70,000 | $80,000 | $80,000 | | 13,000 | $65,000 | $75,000 | $85,000 | | 14,000 | $60,000 | $70,000 | $90,000 | **Explanation of the Table:** - **Quantity**: The number of individuals receiving higher education. - **Private Marginal Benefits**: The additional benefit received by the individuals per unit of higher education. - **Private + Social Marginal Benefits**: The sum of the private marginal benefits and the additional benefits to society from each extra unit of higher education. - **Marginal Costs**: The additional cost of providing one more unit of higher education. **Example Calculation:** 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). [Input box for answer] This exercise helps illustrate the external benefits of education and the role of subsidies to align private incentives with social optimal outcomes. **Instructions for Students:** 1. Examine each row to understand the trade-offs between marginal benefits and marginal costs. 2. Consider how subsidies might align the private marginal benefits with the social marginal benefits. 3. Calculate the required subsidy to balance marginal costs with the combined marginal benefits for social equilibrium.
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