2. The demand for education in the market is given by D (p) = 100,000 - p where D (p) is the number of degrees. (a) If the market is competitive where the cost to each provider of a degree is $10,000, then what is the equilibrium number of degrees and the equilibrium price? (b) Suppose that there is external benefit of $10,000 per degree. What is the efficient number of degrees? (c) ( Draw a diagram with relevant marginal values and marginal costs showing the competitive outcome, the efficient outcome, and the lost surplus from a competitive market. Label the relevant curves and the relevant outcomes.
2. The demand for education in the market is given by D (p) = 100,000 - p where D (p) is the number of degrees. (a) If the market is competitive where the cost to each provider of a degree is $10,000, then what is the equilibrium number of degrees and the equilibrium price? (b) Suppose that there is external benefit of $10,000 per degree. What is the efficient number of degrees? (c) ( Draw a diagram with relevant marginal values and marginal costs showing the competitive outcome, the efficient outcome, and the lost surplus from a competitive market. Label the relevant curves and the relevant outcomes.
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter7: Consumers, Producers, And The Efficiency Of Markets
Section: Chapter Questions
Problem 8PA
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Transcribed Image Text:2.
The demand for education in the market is given by D (p) = 100,000 p
where D (p) is the number of degrees.
(a)
If the market is competitive where the cost to each provider of a degree
is $10,000, then what is the equilibrium number of degrees and the equilibrium
price?
(b)
Suppose that there is external benefit of $10,000 per degree. What is the
efficient number of degrees?
(c) (
Draw a diagram with relevant marginal values and marginal costs
showing the competitive outcome, the efficient outcome, and the lost surplus from
a competitive market. Label the relevant curves and the relevant outcomes.
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