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Question: problem 2 externality consider the market for education the marginal...

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Problem 2: Externality Consider the market for education. The marginal social cost of education (MSC) and the marginal private benefit of education (MPB) are given by the following equations where Q is the number of units of education provided per year. MSC 10+ Q MPB 100-Q You are also told that each unit of education provides an external benefit to society of $10 per unit. This external benefit is currently not being internalized in the market. a) Given the MSC and MPB curves, what is the current number of education units being b) Is the current level of market production for education the socially optimal amount of c) What is the value of consumer surplus (CS) and the value of producer surplus (PS) of the produced by the market? education? Explain your answer. What is the socially optimal amount of education? current level of production? Draw a diagram illustrating each of these concepts in the market for education. Given the market level of production, what is the deadweight loss in this market? d)
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