It is widely known that the marginal social benefit from having a more educated population is greater than the marginal private benefit received from education. Therefore, education creates _____ externalities, and the free market leads to _____ education compared to the social optimal.

Question

Quizplus · Accepted Answer

Education creates positive externalities because the benefits extend beyond the individual to society at large, such as higher productivity and better civic engagement. However, because the free market does not account for these external benefits, it results in less education being provided than what would be socially optimal.

It Is Widely Known That the Marginal Social Benefit from Having