What is the socially optimal number of years of education

Assignment Help Econometrics
Reference no: EM13245673

The accompanying table illustrates the marginal benefit to Sian per year of education and the marginal cost per year of education. Each year of education has a marginal external benefit to society equal to $8,000. Assume that the marginal social cost is the same as the marginal cost paid by an individual student.

Qty. Of Education (yrs)|Sian's Marginal Bene. Per Yr.|Sian's Margin. Cost Year

9
 $20,000 ...........................| $15,000
10
 19,000 .............................| 16,000
11
 18,000 ..............................| 17,000
12
 17,000 ..............................| 18,000
13
 16,000 ..............................| 19,000
14
 15,000 ..............................| 20,000
15
 14,000 ..............................| 21,000
16
13,000 ..............................| 22,000
17

A. Find Sian's market equilibrium number of years of education.

B. Calculate the marginal social benefit schedule:
Yrs of Edu.|ben. ea/yr|extern.ben. to society|social ben.|cost per yr

9 ...........| ---------- | --------------------------- | ----------- | ---------
10 ......... | $20,000...| ......$8,000 .............| ---------- | $15,000
11 ......... | 19,000....| ....... 8,000 ............ | ----------- | 16,000
12 ......... | 18,000....| ....... 8,000 ............ | ----------- | 17,000
13 ......... | 17,000....| ....... 8,000 ............ | ----------- | 18,000
14 ......... | 16,000....| ....... 8,000 ............ | ----------- | 19,000
15 ......... | 15,000....| ....... 8,000 ............ | ----------- | 20,000
16 ......... | 14,000....| ....... 8,000 ............ | ----------- | 21,000
17 ......... | 13,000....| ....... 8,000 ............ | ----------- | 22,000

What is the socially optimal number of years of education?

C.You are in charge of education funding. Would you use a Pigouvian tax or a Pigouvian subsidy to induce Sian to choose the socially optimal amount of education?

D.How high would you set this tax or subsidy per year of education?

Reference no: EM13245673

Questions Cloud

The law of comparative advantage recommends that countries : The law of comparative advantage recommends that countries specialize in those products in which they have a comparative advantage, not an absolute advantage.
Determine the angular velocity of the earth : Assume the Earth is in uniform cicular motion about the sun. Explain how to determine the angular velocity of the Earth
Interpret the coefficients of each explanatory variable : Analysts at the Fleetfeet Corporation estimate a demand function for its athletic shoe line to be: Qf = 5 - 2.4*Pf + 0.7*A + 0.002*I + 0.8*Ps Where Qf = the quantity of shoes sold, Pf = the own price of shoes produced by Fleetfeet ($/pair)
How banks are financial intermediaries : Explain how banks are financial intermediaries. What are reserves? What are excess reserves? Explain how the Fed can affect the quantity of excess reserves in the banking system
What is the socially optimal number of years of education : The accompanying table illustrates the marginal benefit to Sian per year of education and the marginal cost per year of education. Each year of education has a marginal external benefit to society equal to $8,000.
Who can produce any linear combination of chickens : Suppose that two people, Michelle and James each live alone in an isolated region. They each have the same resources available, and they grow potatoes and raise chickens. If Michelle devotes all her resources to growing potatoes
What is the mass of the unknown element : A sample containing beryllium (atomic mass 9 u), aluminum (27 u), and an unknown element is placed in a mass spectrometer, What is the mass of the unknown element
What is the marginal revenue at the price computed in part : Ajax Cleaning Products is a medium-sized firm operating in an industry dominated by one large firm- Tile King. Ajax produces a multiheaded tunnel wall scrubber that is similar to a model produced by Tile King. Ajax decides to charge the same price as..
What advice would give to friend under the circumstances : In the following year, your friend asks for your help again. All of the data remain the same; however your friend finds that she is no longer profitable in the spring, summer, or fall months. What advice would you give to her under these circumsta..

Reviews

Write a Review

Econometrics Questions & Answers

  Design a simple econometric research project

Design a simple econometric research project

  Multiplicative decomposition method

Multiplicative decomposition method

  Market for cigarettes

The Australian government administers two programs that affect the market for cigarettes.

  Solve the forecast model

Solve the forecast model

  What are the marginal abatement cost functions

What are the marginal abatement cost functions for each of the two areas? Calculate the loss in the two areas due to over-control (for the rural area) and under-control (for the urban area).

  Write the t statistic for testing the null hypothesis

Explain why this model violates the assumption of no perfect collinearity.  Write the t statistic for testing the null hypothesis

  What is economics system

What is economics system? What are the types of economics system? Briefly explain each type of economics system by giving examples of nations that are close to each type

  Multiple choice questions related to market concentration

Determine when a competitively produced product generates negative externalities in production, the industry will,

  Calculating number of units produced by firm

Assume a company has the following production function: Q = 100 K.5 L1 . Currently, the company hires 1,000 workers and employs 100 units of capital.

  Question about mobile commerce

M-commerce also known as mobile commerce is being lumped in with several strategic internet plans. Explain some of the industries that are likely to use mobile commerce and how it is working for them.

  Calculating the average days past due and average flow time

Auto Data manufactures custom engineering testing machine. The following 5-orders are currently in the design department:

  Mechanism of an english auction and second price auction

Briefly discuss the difference between mechanism of an oral or English auction and a Vickrey or second price auction.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd