Suppose a Subsidy Is Offered to Consumers of Education as a Means

question 34

Essay

Suppose a subsidy is offered to consumers of education as a means of internalizing the externalities associated with education. If the subsidy accurately reflects the external benefits of education, then the new demand curve for education coincides with which other curve?

---

Definitions:

NPV

Net Present Value; a method used in capital budgeting to assess the profitability of a project or investment by calculating the difference between the present value of cash inflows and outflows.

CCA Rate

Stands for Capital Cost Allowance rate, which is a tax deduction in Canada that represents a business's investment in certain assets depreciating over time.

Tax Rate

The Tax Rate is the percentage at which an individual or corporation is taxed by the government on its income.

EAC

Stands for Equivalent Annual Cost, a concept used in capital budgeting to represent the cost per year of owning and operating an asset over its entire lifespan.