8. Suppose the following data represent the market demand for college education: Tuition (per year) $5,000...

 

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8. Suppose the following data represent the market demand for college education: Tuition (per year) $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 Enrollment demanded 8 7 6. 4 2 1 (in millions per year) (a) If tuition is set at $15,000, how many students will enroll? Now suppose that society gets an external benefit of $5,000 for every enrolled student. (b) Draw the social and market demand curves for this situation on the graph below. (c) What is the socially optimal level of enrollment at the same tuition price of $15,000? (d) How large of a subsidy is needed to achieve this optimal outcome? 9. Assume the market demand for cigarettes is Price per pack Quantity demanded (million packs per year) $10 $9 $8 $7 6. $6 $4 $3 $5 12 2 4 8. 10 14 16 Suppose further that smoking creates external costs valued at $2.00 per pack. Graph the social and market demand curves. (a) What is the quantity demanded in the market? (b) What is the socially optimal quantity?? (c) If the government were to intervene and tax cigarettes, how large of a tax is needed per pack to achieve this optimal outcome? 8. Suppose the following data represent the market demand for college education: Tuition (per year) $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 Enrollment demanded 8 7 6. 4 2 1 (in millions per year) (a) If tuition is set at $15,000, how many students will enroll? Now suppose that society gets an external benefit of $5,000 for every enrolled student. (b) Draw the social and market demand curves for this situation on the graph below. (c) What is the socially optimal level of enrollment at the same tuition price of $15,000? (d) How large of a subsidy is needed to achieve this optimal outcome? 9. Assume the market demand for cigarettes is Price per pack Quantity demanded (million packs per year) $10 $9 $8 $7 6. $6 $4 $3 $5 12 2 4 8. 10 14 16 Suppose further that smoking creates external costs valued at $2.00 per pack. Graph the social and market demand curves. (a) What is the quantity demanded in the market? (b) What is the socially optimal quantity?? (c) If the government were to intervene and tax cigarettes, how large of a tax is needed per pack to achieve this optimal outcome?

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8a Based on the numerical information regarding the yearly tuition and the corresponding quantity demanded of yearly enrollment presented in the question when the yearly tuition is 15000 the total num... View the full answer