Essay
-The figure above shows the market for education. Education has an external benefit.
a) If the market is competitive and left unregulated, how many students will be enrolled per year?
b) What is the efficient number of students?
c) In the figure, show the effect of a government private subsidy that moves the market to the efficient number of students. What is the amount of the subsidy and what tuition must the students pay?
Correct Answer:
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a) If the market is competitive and left...
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