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The goal of the analytical question is to model the potential crowding out of private education. To do, we compare the choices of parents in
The goal of the analytical question is to model the potential crowding out of private education. To do, we compare the choices of parents in three different states: one where there is only private education, one where there is only public education and one where both are presents. We also study how choices depends on parental income. {Note: this question is automatically graded. The system checks whether your answer matches the one entered by the instructor. When asked to pick between Y/N/U, enter only one letter in capital format: Y, N or U don't enter Yes, No or Uncertain. When asked to enter a value only enter the number, for instance 5. Don't enter 5 units, or 5 cereal bars, 5$, etc.} Let there be 3 states, New South Pales (NSP), Tictoria (Tic) and Kingsland (Kng). In NSP there is only private education, in Tictoria there is both private and public education, while in Kingsland there is only public education. Public education is free, and provides 25 weekly hours, but it cannot be combined with private education. In both states parents preferences over the amount of education for their children (e) and the consumption of other goods (c) are expressed by the utility u(e,c)=ec(1-a), where 0
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