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Post-secondary education in the province of Ontario is a good that generates positive interjurisdictional externalities. The demand for post-secondary education in the province is given
Post-secondary education in the province of Ontario is a good that generates positive interjurisdictional externalities. The demand for post-secondary education in the province is given by P=10000-0.2Q and supply is given by P=0.4Q, where Q is the number of students and P is tuition in dollars per student. The marginal external benefit is given by MEB=0.1Q. The federal government is considering giving the province a matching conditional grant to help support it's spending on post-secondary education. Using a graph with dollars on the vertical axis and Q on the horizontal axis, answer the following questions. What ad valorem rate of matching will induce the efficient level of provision of post-secondary education in the province? % If the federal government gives the province a matching conditional grant that ensures the efficient level of provision of post-secondary education in the province, what tuition fee will each student pay for education? $ If the federal government gives the province a matching conditional grant that ensures the efficient level of provision of post-secondary education in the province, how much money will the grant cost the federal government in total? $
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