Reference no: EM132488658
Use the following data to work Problems
The table shows the demand for university education. The marginal cost of educating a student is a constant $4,000 a year and education creates an external benefit of a constant $2,000 per student per year.
Price (dollar per student) Quantity ( Student per year)
6,000 10,000
5,000 20,000
4,000 30,000
3,000 40,000
2,000 50,000
1. If all universities are private and the market for education is competitive, calculate the number of students, the tuition, and the deadweight loss.
2. If all universities are public, calculate the tuition that will achieve the efficient number of students. How much will taxpayers have to pay?
3. If the government decides to subsidize private universities, what subsidy will achieve the efficient number of students?
4. If all universities are private and the government offers vouchers to those who enroll, calculate the value of the voucher that will achieve the efficient number of students.