Question
Suppose a family with 1 child has $20,000 per year to spend on private goods and education, and suppose all education is provided privately. Draw
Suppose a family with 1 child has $20,000 per year to spend on private goods and education, and suppose all education is provided privately. Draw the family's budget set. Suppose now there is free public education available, at a price of $4000 per year per child. Draw 3 different indifference curves for each of 3 types: 1) those where free education would lead to an increase in the amount of education spending for their kids, 2) those for whom the free option leads to less total spending on education for their kids, and 3) those for whom the free option leaves their spending on education unchanged.
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