Because There Are Positive Externalities from Higher Education

question 87

Multiple Choice

Because there are positive externalities from higher education,

• A)private markets will under-supply college classes.
• B)private markets will over-supply college classes.
• C)the government should impose a tax on college students.
• D)government intervention cannot improve the market for college classes.

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Definitions:

Payback Period

The length of time it takes for an investment to generate enough cash flow to recover its initial cost.

Salvage Value

The expected remaining valuation of an asset after its service life has ended.

Straight-Line Method

A method of allocating the cost of a tangible asset over its useful life in equal annual installments.

Net Present Value

A method used to evaluate the profitability of an investment, calculating the difference between the present value of cash inflows and outflows over a period.