Some economists claim that early child care generates an external benefit to society. Use the below graph to answer the following questions. Price ($ per month) Supply 1,300 1,200 1,000 900 Marginal Social Benefit 1. Marginal Private Benefit 23 26 Quantity (millions per month) What is the market equilibrium? What is the socially optimal outcome? How do they differ? a. 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? с. How much is the total government subsidy each month to reach a socially optimal outcome?
Some economists claim that early child care generates an external benefit to society. Use the below graph to answer the following questions. Price ($ per month) Supply 1,300 1,200 1,000 900 Marginal Social Benefit 1. Marginal Private Benefit 23 26 Quantity (millions per month) What is the market equilibrium? What is the socially optimal outcome? How do they differ? a. 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? с. How much is the total government subsidy each month to reach a socially optimal outcome?
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter17: Externalities And The Environment
Section: Chapter Questions
Problem 10PAE
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