What fraction of total resources is spent on education

Reference no: EM133662387

Assignment:

1. In response to low SAT scores by high school students, politicians have decided to abolish all private provision of education and move to a purely public education system. That is, all school will be publicly funded. The government has W total resources available to divide between units of educational quality (E) and spending on all other public goods (G). Aggregate preferences within the country over E and G are given by:

U = alpha * ln(G) + (1 - alpha)ln(E) where alpha ∈ (0,1). The cost of each unit of education quality is 6!.

a) If the country maximizes the aggregate utility function above, how many units of education quality will it provide?

b) What fraction of total resources is spent on education, and what fraction of total resources is spent on other public goods? How do these fractions depend on the price 6! of educational quality and total government resources !?

Reference no: EM133662387

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