Microeconomics: Principles & Policy
14th Edition
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:William J. Baumol, Alan S. Blinder, John L. Solow
Chapter3: The Fundamental Economic Problem: Scarcity And Choice
Section: Chapter Questions
Problem 3DQ
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Question
Explain why economists might say that the market for higher education demonstrates externalities and market failure.
Expert Solution
Step 1
Higher education when attained by students,gives rise to employment.
Therefore according to economists,higher education has positive externalities.
When students get higher education,society gets benefit,as after higher education they do jobs and provide benefits to society.
Therefore sometimes the demand for jobs may be less than supply of jobs,which would create market failure.
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