The attached figure indicates the initial market for tertiary education in a country that pays a subsidy of $10 000 per year to each student enrolled in tertiary education. iI is assumed that assume that: 1) education was left to the competitive free market; 2) the marginal private benefit is equal to the marginal social benefit; 3) the marginal private cost is equal to the marginal social cost. Identify the area of the figure that depicts the total size of the subsidy paid by the government to the students enrolled in tertiary education. Who gains and who loses from such a subsidy?

The attached figure indicates the initial market for tertiary education in a country that pays a subsidy of $10 000 per year to each student enrolled in tertiary education. iI is assumed that assume that: 1) education was left to the competitive free market; 2) the marginal private benefit is equal to the marginal social benefit; 3) the marginal private cost is equal to the marginal social cost. Identify the area of the figure that depicts the total size of the subsidy paid by the government to the students enrolled in tertiary education. Who gains and who loses from such a subsidy?

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter3: Your Role As A Consumer

Section: Chapter Questions

Problem 5AA

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