Suppose that a family with one child has $20,000 per year to spend on private godsend education, and further suppose that all education is privately provided. Draw this family’s budget constraint. Suppose now that an option of free public education with spending of $4,000 per pupil is introduced to this family. Draw three different indifference curves corresponding to the following three situations: (a) a free public education would increase the amount of money that is spent on the child’s education; (b) agree public education would decrease the amount of money that is spent on the child’s education; and (c) a free public education would not affect the amount of money spent on the child’s education.
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