Project #89281 - Micro-Economics

ESSAY EXAM IN CLASS 1 FALL 20015

Education is regarded as both a private good in that the benefits of education accrue to the educated person who reaps much of the benefit in the form of higher wages while education in general is said to yield positive externalities. 

  1. Give three forms that positive externalities of education are said to occur. Evaluate the significance of these three positive externalities.
  2. Draw a diagram which illustrates these forms of positive externalities and which shows the equilibrium being below the optimum.

The government can correct for this “market failure” –the socially optimum quantity is greater than the quantity that the private market would naturally reach on its own-by subsidizing education by such means as heavily subsidizing public schools, government scholarships and student loans.   

  1. List the forms of subsidy to education and evaluate their effectiveness in achieving their objectiveness.  Give reasons why you regard the subsidies are effective or ineffective. Offer alternatives to either improving their effectiveness or deploying other policies that may achieve the same objectives.
  2. Discuss whether education delivered through a market without regulation or subsidies is a market failure. Similarly discuss whether the failure resides with the implementation of government policies. If the latter, give reasons why the government “fails” to bridge the gap between the social value and the private value.

Sources: Manikew, Microeconomics Text, edition 7, chapter 10, pages 200-201.

 REGULATIONS

 

The essay will be written in a Blue Book (large or small versions) that can be obtained from the college bookstore. Before starting, all books and notes should be put away and should not be consulted during the writing of the essay. There is a time limit of an hour. You may write your essay in a constructed style or you may use “bullet points”. The choice is up to you. You are not being examined on style. You may write in ink or pencil. Do not forget to write your name on the cover of the Blue Book.

Subject Business
Due By (Pacific Time) 11/02/2015 12:00 am
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