Education is heavily subsidized through public schools and government scholarships. This subsidization of education reflects the fact that
A)a negative externality requires a subsidy to move the market equilibrium closer to the social optimum.
B)the social cost of education exceeds the private cost of education.
C)the social value of education exceeds the private value of education.
D)the market-equilibrium quantity of education exceeds the optimal quantity of education.

Question

Quizplus · Accepted Answer

The fact that education is heavily subsidized through public schools and government scholarships suggests that the social value of education exceeds the private value of education. This is because education has positive externalities, meaning that the benefits of education spill over to society as a whole and not just to the individual receiving the education. By subsidizing education, the government is able to increase the overall level of education in society, which in turn leads to benefits such as increased productivity and innovation. This reflects a market failure, as the private market does not take into account these positive externalities and therefore underinvests in education.

Education Is Heavily Subsidized Through Public Schools and Government Scholarships