Asked by
Arturo Rocha
on Oct 26, 2024
Verified
Suppose that each person in a community had to pay for his or her own education from kindergarten through high school.One would expect that:
A) less education would be acquired than at present since an individual may not consider the positive external benefits of education to society.
B) more education would be acquired than at present since an individual may not consider the positive external benefits of education to society.
C) the optimal amount of education would be acquired by community members since they each paid for the amount of education they wanted.
D) a Pigouvian tax would ensure the optimal amount of education.
Positive External Benefits
benefits that result from a product or service's use that affect someone other than the direct buyer or seller, often leading to social gains.
Optimal Amount
The quantity of a good or service that achieves the best possible balance between costs and benefits.
Pigouvian Tax
A tax levied on activities that generate negative externalities, intended to correct the market outcome by internalizing the external costs.
- Understand the concepts of private and external benefits in the context of public goods and common resources.
- Analyze the economic implications of policies designed to correct for positive externalities.
Verified Answer
MA
Learning Objectives
- Understand the concepts of private and external benefits in the context of public goods and common resources.
- Analyze the economic implications of policies designed to correct for positive externalities.