The figure below shows the demand and supply curves in the market for elementary education. Figure 13.1
In the figure,
D: Private demand curve for elementary education
D + s: Demand curve which includes public benefits
S: Supply curve of education
Price and Quantity have been taken on vertical and horizontal axes respectively.
Figure 13.1 represents a situation of:

Question

The figure below shows the demand and supply curves in the market for elementary education. Figure 13.1
 In the figure,
D: Private demand curve for elementary education
D + s: Demand curve which includes public benefits
S: Supply curve of education
Price and Quantity have been taken on vertical and horizontal axes respectively.
Figure 13.1 represents a situation of:

Quizplus · Accepted Answer

The presence of the demand curve that includes public benefits (D + s) indicates that there are positive externalities in the consumption of elementary education. This means that the private demand curve (D) underestimates the total benefits of education to society, leading to an underallocation of resources towards education. In order to reach the optimal provision of education, there would need to be some government intervention to increase the level of education in the market, such as subsidies or public provision. Therefore, the situation represented in Figure 13.1 is an example of positive externalities in the market for elementary education.

The Figure Below Shows the Demand and Supply Curves in the Market