Question
(40pts) The following is part of the article Hong Kong should follow Singapore in subsidizing private preschool, says educator inSouth China Morning Post, March 19,
(40pts) The following is part of the article "Hong Kong should follow Singapore in subsidizing private preschool, says educator" inSouth China Morning Post, March 19, 2014. "Hong Kong can learn from Singapore, where the government subsidizes private kindergartens to make them affordable for poorer families, says a Singapore-based international education group."
a. (20pts) Assume that the private preschool supply in Hong Kong is perfectly inelastic. Use the demand-supply analysis to either criticize or support the above statement. Evaluate the suggested policy in terms of market price and social welfare.
b. (20pts) Assume that the private preschool supply in Hong Kong is perfectly elastic. Use the demand-supply analysis to either criticize or support the above statement. Evaluate the suggested policy in terms of market price and social welfare
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