Figure 1512 University Education Benefits Society by Producing a More

question 40

Multiple Choice

Figure 15.12 University education benefits society by producing a more employable workforce, reducing crime and creating a better informed citizenry.Thus, the social benefits of university education exceed the private benefits for any level of university education.This is illustrated in Figure 15.12.
-Refer to Figure 15.12.One way to obtain the economically efficient amount of university education is for governments to subsidise university education.What is the size of the per-student Pigovian subsidy that the government must provide to internalise the external benefits? (Note that the subsidy can be granted to the education institutions or to the students directly or indirectly; for example, through low-interest student loans.)

• A)P₂ - P₀
• B)P₂ - P₁
• C)P₀ - P₁
• D)P₁

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Definitions:

Usury Statutes

Laws that set maximum interest rates that lenders can charge borrowers.

Interest Rates

The cost of borrowing money expressed as a percentage of the sum borrowed, or the return earned on invested funds, often influencing economic activity and financial decisions.

Credit Card Transactions

Financial activities conducted using a credit card, such as purchases, cash advances, or payments.

Illegal Contract

A contract that is void and unenforceable from its inception because it involves activities that are against the law or public policy.