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Question 8 1 pts Consider the information in the file HW7 Positive Consumption Externality. In the absence of any government policy, million people would be
Question 8 1 pts Consider the information in the file HW7 Positive Consumption Externality. In the absence of any government policy, million people would be educated. Ignoring the external benefits enjoyed by the affected parties, the total surplus would equal billion dollars. The total external benefit would equal billions dollars so that the total surplus including the total external benefit would equal billion dollars. Question 9 1 pt Consider the information in the file HW7 Positive Consumption Externality. The allocatively efficient number of students equals million. Therefore, in the absence of any government education policy, there would be a deadweight loss of billion dollars in this country due to not educating the "right number" of students. If the government decides to provide a Pigouvian subsidy to students in order to educate the allocatively efficient number of students, it will have to collect a total ta of billion dollars to implement the subsidy program. In that case, the deadweight loss will change to billion dollars. The following graph shows the annual marginal private costs and benefits of education in a small third world country. The horizontal axis measures the number of persons educated. Each person that is educated benefits the society by MXB = $24,000. $72,000 $68,000 564,000 560,000 $56,000 $52,000 $48,000 544,000 $40,000 $36,000 $32,000 $28,000 $24,000 $20,000 516,000 $12,000 58,000 54,000 50 MPB (D) 0 1,000,000 2,000,000 3,000,000 4,000,000 5000000 6,000,000 7,000,000 8,000,000 9,000,000 10,000,000
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