Explain the various major reasons why the quantity of education in a country wou

Question

Explain the various major reasons why the quantity of education in a country would likely be less than the efficient amount in the absence of any government intervention. Include a carefully labeled and well-explained supply-demand diagram that shows the efficient quantity of education the market quantity of education and why the two differ. Your explanation should consider and explain the role of market failure and should give some specific examples of reasons why investments in education for which the benefits exceed the costs might not occur without some government intervention

Explanation / Answer

without the intervention of govt the private organizations increase the prices with increase in demand. therefore the demand falls due to high price and results in dead weight loss. when the govt sets the maximum price limit the equilibrium shift to a lower price level and hence more quantity of students can be accomodated see this link for graph http://2.bp.blogspot.com/_DEJNL8HLMpg/SDWKI7hDutI/AAAAAAAAAGQ/49-MhIjrwy4/s400/graph+2+for+econs+blog.bmp

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