Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Question
Chapter 10, Problem 6MCQ
To determine
To choose:
The option that correctly explains the effect of positive externality created due to education.
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Because education generates a positive externality,
A. subsidies to colleges or vouchers to students are means of achieving the efficient number of graduates
O B. graduates' marginal benefit exceeds the society's value of the education
C. the quantity of education undertaken will achieve the social interest if it is free
D. everyone who wants a college education should get one
Time Rema
B. The figure below shows the market for education.
20
S- MSC:
12
MSE
D- MD
2
4
10
Quantity (millions of students per yeorl
i.
'Education has externalities'. Explain this statement.
ii.
If the market is competitive and left unregulated, how many students will be enrolled
per year? Are the resources allocated efficiently when such number of students are
enrolled per year? Explain using the graph above.
iii.
In the figure above, what kind of government intervention is required to achieve the
optimal or efficient number of students? What is the optimal number of students? How
much intervention needed to achieve the optimal number of students?
luian arc cost lihousa-cs of delan per stdent
Next question
Which of the following is an example of a positive externality?
A. A lower inflation rate would benefit most consumers.
B. Compulsory flu shots for all students prevents the spread of illness in the general public.
C. Promoting generic drugs would benefit people.
D. Singapore has adopted a comprehensive savings plan for all workers known as the Central Provident Fund.
Chapter 10 Solutions
Foundations of Economics (8th Edition)
Ch. 10 - Prob. 1SPPACh. 10 - Prob. 2SPPACh. 10 - Prob. 3SPPACh. 10 - Prob. 4SPPACh. 10 - Prob. 5SPPACh. 10 - Prob. 6SPPACh. 10 - Prob. 7SPPACh. 10 - Prob. 8SPPACh. 10 - Prob. 9SPPACh. 10 - Prob. 10SPPA
Ch. 10 - Prob. 1IAPACh. 10 - Prob. 2IAPACh. 10 - Prob. 3IAPACh. 10 - Use the following information to work Problems 3...Ch. 10 - Prob. 5IAPACh. 10 - Prob. 6IAPACh. 10 - Prob. 7IAPACh. 10 - Prob. 8IAPACh. 10 - Prob. 9IAPACh. 10 - Prob. 1MCQCh. 10 - Prob. 2MCQCh. 10 - Prob. 3MCQCh. 10 - Prob. 4MCQCh. 10 - Prob. 5MCQCh. 10 - Prob. 6MCQ
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Similar questions
- Explain why economists might say that the market for higher education demonstrates externalities and market failure.arrow_forwardWhat is the concept of a negative externality in economics? A. A benefit received by individuals who did not incur the cost B. A cost incurred by individuals who did not receive the benefit C. A situation where external parties receive equal benefits and costs D. A situation where the government intervenes in the marketarrow_forwardWhich of the following is a positive externality from education? a.Better-educated people make their coworkers more productive. b.Better-educated people tend to earn higher wages. c.Better-educated people live longer than less educated people. d.Better-educated people are less likely to vote and participate in a democracy.arrow_forward
- Classify each statement as a positive externality associated with education or a negative externality associated with education. Positive externalties of education Negative externalities of education Answer Bank a higher voter participation rate reduced welfare dependency an increased standard of living lower crime ratesarrow_forwardIn the case of a positive externality that is generated in a good production process, the main issue will be: a. That consumers will be negatively affected. b. That there will be too much production of it. c. That there will be not enough production of it. d. That there will be no policy solution to it.arrow_forwardAn externality is the impact of: a. None of the answers is correct. b. one person’s actions on the well-being of another person c. a person’s actions on his well-being.arrow_forward
- Q35 Which of the following phenomena is NOT an example of market failure? a. A positive externality. b. Diminishing marginal returns. c. Moral hazard. d. Asymmetric information. e. Public goods.arrow_forwardIf education has private benefits to an individualas well as external benefits to society, explain whya less-than-optimal amount of education occurs.arrow_forwardWhy is a price change NOT an externality? Select one: a. A price change affects bystanders, not market participants. b. A price change does NOT change total costs or benefits, it only changes who buys the good. c. A change in price changes the marginal benefit of a good but does NOT change who buys and sells the good. d. A price change redistributes costs but not benefits.arrow_forward
- Market failure can be caused by Select one: a. externalities and market power Ob. government intervention and price controls O c. high prices and foreign competition d. low consumer demandarrow_forwardThe south African government develops targets that pertain to healthcare and education. Which of the following statements explains why government provides these two goods? A. The benefit to society of healthcare and education is extremely low. B. The benefits that society receives from health care and education exceed those that accrue to an individual user. C . The government spends money on health care and education because they are public goods D. Health care and education only produce negative externalities.arrow_forwardWhat is a market-failure rationale for the government investing in education and training programs? a. Education likelyresults in a negative externality in production, so government investment corrects for the under-provision by private, unregulated markets. b. Education likely results in a positive externality in consumption, so government investment corrects for the under-provision by private, unregulated markets. c. Education likely results in a positive externality in production, so government investment corrects for the over-provision by private, unregulated markets. d. Education likely results in a negative externality in consumption, so government investment corrects for the over-provision by private, unregulated markets.arrow_forward
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