On the graph, move the point, P, to the point representing the optimal level of education. MSC Dollars (thousands) MSB...

Question

Question

On the graph, move the point, P, to the point representing the optimal level of education. MSC Dollars (thousands) MSB 0 2 4

Answer 1

Answer #1

Optimal schooling: 14 years
(This is determined where MSB = MSC.)

Pigouvian subsidy: $30 thousand
(As 14 years are demanded at $30 thousand, so, subsidy of $30,000 should be given.)

Answer 2

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