Question
Offered Price \$14.00

# Kaplan BU 224 MICROECONOMICS Unit 9 Homework

Question # 00028269
Subject: Economics
Due on: 10/14/2014
Posted On: 10/14/2014 05:34 AM

Rating:
4.1/5
Posted By
Questions:
15717
Tutorials:
15365
Feedback Score:

Question

HOMEWORK - UNIT 9

EXTERNALITIES

Chapter 17 / EXTERNALITIES

Education is an example of a positive externality: acquiring more education benefits the individual student and having a more highly educated work force is good for the economy as a whole.

The accompanying table illustrates the marginal benefit to Sian per year of education and the marginal cost per year of education. Each year of education has a marginal external benefit to society equal to \$8,000. Assume that the marginal social cost is the same as the marginal cost paid by an individual student.

.png">

a.Find Sian’s market equilibrium number of years of education(20pts)

b.Calculate the marginal social benefit schedule(24pts)

 Years of Education Sian’s marginal benefit per year Marginal external benefit to society Marginal social benefit Sian’s marginal cost per year 9 - 10 \$20,000 11 19,000 12 18,000 13 17,000 14 16,000 15 15,000 16 14,000 17 13,000

What is the socially optimal number of years of education?(20pts)

c.You are in charge of education funding. Would you use a Pigouvian tax or a Pigouvian subsidy to induce Sian to choose the socially optimal amount of education? (18pts)

How high would you set this tax or subsidy per year of education?(18pts)

Tutorials for this Question
Available for
\$14.00

#### Kaplan BU 224 MICROECONOMICS Unit 9 Homework

Tutorial # 00027686
Posted On: 10/14/2014 05:35 AM
Posted By:
expertden
Questions:
15717
Tutorials:
15365
Feedback Score:
Tutorial Preview …Kaplan…
Attachments
ECONOMICS_BU224_Unit_9_Homework.doc (42 KB)
Preview not available.
* - Additional Paypal / Transaction Handling Fee (3.9% of Tutorial price + \$0.30) applicable