Scottish independenceIndependence - Does Scotland need the pound? More..

Clearing 2014Clearing 2014 - your guide to university clearing. More..

UnemploymentUnemployment - down again, to 6.4%, as jobs market continues to strengthen. More..

CPI inflationCPI inflation - grew by 1.9% in the year to June 2014.

UK GDPUK trade figures - Sterling undermines rebalancing strategy.

UK GDPUK growth - GDP up 0.8% in the first quarter of 2014.

UK Energy marketEnergy market - to be investigated by new competition watchdog More..

Bank of England and Mark CarneyBank of England - downgrades unemployment threshold.

OECDOECD - latest forecasts for the OECD countries..More

 

Updates statisticsUpdates Get the latest updates on the UK economy, including GDP, inflation. More..

Revision guidesStudy guides Latest resources for students from Economics Online

Data response techiqueHow to answer data response questions. More...

Multiple choiceMultiple choice tests Improve knowledge and understanding of Economics. More...

 

 

 

bar

 

 

Education


Question 1

The effective funding of higher education is a significant issue facing most advanced economies. Providing education is a highly expensive activity, though the benefits are hard to quantify.

  1. To what extent is higher education a good example of a merit good?
  2. Using a diagram, show the effects of subsidising university places.
  3. Evaluate the case for students paying the full cost of their university tuition during the duration of their course

Question 2

A government has recently conducted research into the long-term benefits of education. It estimates that, if students paid the full fees, the following would chose to go to university. It is also estimated that the real net private benefit to students is 20% more than they realise and that the benefits to society in general are a further 30% higher.

Tuition fees per year (£)  Demand for places (000) Supply of places (000)
14,000 100 300
12,000 150 250
10,000 200 200
8,000 250 150
6,000 300 100
4,000 350 50
2,000 400 0

Use graph paper to:

  1. Plot the market demand and supply and show the free ‘market’ price (fee) and quantity (of places)

  2. Calculate the ‘socially optimal level of demand’ at each price level, and plot this on the graph.

  3. Show the new socially optimal number of students and the fee needed to get this number going into university.

  4. Evaluate methods to achieve the socially optimal level of higher education.