Suppose That Both the Local Government and a For-Profit Business

question 7

Essay

Suppose that both the local government and a for-profit business run primary schools. The local government provides free education while the business charges fees. Everything else - students, teachers wages, and facilities - is the same. (a) Compare the value added of the two service providers. (b) If the teachers union increases wages for all teachers, in both government and for-profit schools, how would that affect the value added?

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Definitions:

Price Per Share

The market value of a single share of a company's stock, determined by the supply and demand for it in the stock market.

Post-Merger Firm

A company that results from the combination of two or more companies into one entity following a merger.

Cash Acquisition

A method of acquiring another company by purchasing its assets or stock with cash payments.

Synergy Value

The additional value created by the combination of two or more companies or assets, often resulting in cost savings, enhanced revenues, or improved market position.