Assuming education results in a positive externality, which of the following statements is correct?
a. The social cost of producing education exceeds the private cost of producing education.
b. The positive externality can be depicted on a graph by the vertical distance between the supply curve and the social-cost curve.
c. The socially optimal quantity of education will exceed the market equilibrium quantity of education.
d. All of the above are correct.
c
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When financial institutions are able to reduce the costs of information for each service they offer by applying the same information source to each service, we say that the financial institution is realizing
A) economies of scope. B) economies of scale. C) increasing returns. D) diminishing marginal returns.
The housing shock which occurred during the recession of 2007-2009 reduced wealth and residential construction, causing the
A) IS curve to shift to the right. B) IS curve to shift to the left. C) MP curve to shift up. D) MP curve to shift down.
All of the following are non-price determinants of demand except
A) tastes and preferences. B) income. C) technology. D) future expectations.
Suppose that consumers become more pessimistic about the future and, as a result, reduce their consumption by $10 billion. If the marginal propensity to consume is 0.80, how will this $10 billion reduction in consumption affect the equilibrium level of real GDP?
a. Real GDP will decrease by $8 billion. b. Real GDP will decrease by $10 billion. c. Real GDP will decrease by $40 billion. d. Real GDP will decrease by $50 billion.