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ECO206Y5 - Microeconomic Theory - University of Toronto Mississauga

Logistics Assignment

Purpose
To apply the economics that you are learning to the complicated real world and to help you practice your writing skills.

Write about

Your supervisor is searching for options to reduce Ontario universities' financial dependence on international student tuitions. Ontario universities receive most of their funding from government sources and tuition fees. The majority of government funding comes from the Ontario provincial government who collect the tax revenue mostly from Ontario residents. In the past decade, Ontario universities are increasingly relying on international students who pay significantly higher tuition fees than domestic students to make up shortfalls due to the decline in government funding. For example, international students account for 30% new intake at UTM (see attached registrar report).

The Ministry is concerned that our universities may be financially vulnerable to exogenous shocks in the enrollment of international students. The government does not want to raise taxes, so it is nearly impossible to increase government funding for higher education given its current budget situation. Your supervisor thinks the first step to reduce universities' financial dependence on international students is to reduce the enrollment of international students by 5%. But lower international student enrollment would lead to a funding gap for universities.

Your supervisor considers three options. The first option is to further raise tuition fees for international students. The second option is to increase tuition fees uniformly for all domestic students. The last option is to charge higher tuition fees for out-of-province domestic students whose parents are not Ontario residents and thus do not contribute much to the government revenue. Let's assume that it is both legally and politically feasible for the Ontario government to set different tuition fees for students in and out of province. Among the three, she is not sure which one can best reduce Ontario universities' addiction to international students. She also wants the policy to be reasonably equitable. She needs your help in choosing and designing the policy, and would like you to draft a policy recommendation which she will use for her policy briefing to the Minister.

What you will write

Write a policy recommendation that

Question 1. Identify the policy issue. Describe the three options, and select the best option (your recommendation).

Question 2. Explain clearly why you think this is the best option.

Part a. Your recommendation (policy design) must be very specific (e.g., how much you plan to charge different students), and you must show how you arrive at your recommendation through the analysis of qualitative or quantitative data from various sources (e.g., government or universities). You should also suggest how the policy should be implemented. You can use the University of Toronto tuition fees as a benchmark.

Part b. Estimate and predict qualitatively and quantitatively (if possible) how prospective students will respond to your new schedule of tuition fees, and how their response will affect universities' revenue from tuition fees. Evaluate the welfare impact of your policy recommendation.

Part c. Attempt to convey the conditions under which your arguments hold and any potential missing elements. You must be clear about your assumptions and possible reservations or counterarguments to your recommendation.

Organization:

Your paper must have:

a. An introduction (first paragraph) that gives your supervisor a clear answer - your recommendation. In your thesis statement briefly explain what you will be arguing in the assignment and provide a concise summary of your reasoning.
b. Main body, structured into different paragraphs, that provides your analysis.
c. A short concluding paragraph that reiterates your clear answer and the reasons for that answer.
d. A reference section at the end that includes all the sources you cite. This does not count toward the word limit. See the APA formatting and Style Guide.

Attachment:- Microeconomic.rar