Unit 9 Assignment: Externalities Name: - Course Number: -BU224 Section Number: -
ID: 2505971 • Letter: U
Question
Unit 9 Assignment: Externalities
Name: -
Course Number: -BU224
Section Number: -
Unit Number: - 9
Date: -
Education is an example of a positive externality: acquiring more education benefits the individual student and having a more highly educated work force is good for the economy as a whole.
The accompanying table illustrates the marginal benefit to Sian per year of education and the marginal cost per year of education. Each year of education has a marginal external benefit to society equal to $8,000. Assume that the marginal social cost is the same as the marginal cost paid by an individual student.
Quantity of Education
(in years)
Sian
Quantity of Education
(in years)
Sian
Explanation / Answer
1.) His market equilibrium would be 12 years, that is the last year his marginal benefit exceeds his marginal cost.
2.) Marginal social benefit is the sum of the private marginal benefit and the external benefit
Years of Education
Sian
Years of Education
Sian
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