Log in
Economics
1
answer
0
watching
97
views

Take a minute to think about the demand for college education and whether or not the costs of attending college (not just tuition, but also some of the opportunity costs associated with attendance) influence the number of students who attend college. Now tell me whether or not you think a college education is elastic or inelastic about the price, and back up your answer with an explanation as to why you believe what you do. There are no "right" or "wrong" answers to this, but I am interested in your thought process, and this will be graded solely on content.

AT LEAST two paragraphs, please.

Watch
1
answer
0
watching
97
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Chika Ilonah
Chika IlonahLv10
28 Sep 2019

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share

Related textbook solutions

Principles of Economics
2nd Edition, 2017
Openstax
ISBN: 9781947172364
Principles of Macroeconomics
2 Edition,
Openstax
ISBN: 9781947172388
Principles of Microeconomics
2 Edition,
Openstax
ISBN: 9781947172340

Related questions

Individals are of two di §erent abilities: high (H) and low (L). An individual knows his or her own

ability but an employer does not. Employers believe that both types of individuals are equally likely

in the population, and therefore has an initial (prior) belief that an individual is high ability with

probability 1. Before an individual looks for a job, he or she has an opportunity to go to college. 2

Assume that attending college does not change an individualiÌs ability; this problem shows that even in

this circumstance, college can perform a useful social function. The e §ort cost of attending college is

di §erent for individuals of di §erent abilities. In order to attend college, high ability individuals must

expend e §ort 1, and low ability individuals must expend e §ort 1, where a < 3 (this means that a 3a

low ability individual has a higher cost of attending college). Not attending college costs 0. After

observing an individualiÌs education (that is, whether he or she attended college) an employer makes

the individual a job o §er. The wage that the individual receives is equal to the employeriÌs belief that

the individual is high ability, given the level of schooling that the individual has chosen to acquire. For

example, if the employer believes that a college graduate is high ability with probability 2 he will o §er 3

a college graduate a wage of 2 . If he believes that an individal with no college education is high ability 3

with probability 1 , he will o §er an individual without college a wage of 1 : An individualiÌs payo § is 44

equal to his wage, minus the cost of education..

First consider a separating equilibrium. In a separating equilibrium, high ability individuals attend college, but low ability individuals do not.

  1. (a) If the employer observes that an individual did not attend college, what is his belief about the individualiÌs ability? What wage will he o §er individuals who do not attend college?

  2. (b) If the employer observes that an individual did attend college, what is his belief about the indi- vidualiÌs ability? What wage will he o §er individuals who attend college?

  3. (c) Given the wages paid to college graduates and those who do not attend, will the high-ability individual chooose to attend college? (Hint: compare the payo § of attending college for the high ability graduate to the payo § of not attending college)

  4. (d) Given the wages paid to college graduates and those who do not attend, for which values of a will the low-ability individual chooose to attend college? (Hint: compare the payo § of attending college for the low ability graduate to the payo § of not attending college)

  5. (e) In a separating equilibrium, a low ability individual does not attend college. For which values of a is this expectation consistent with the low ability individualiÌs strategy?

    Now, consider a pooling equilibrium in which all individuals attend college; that is, both high and low ability individuals attend college. If some individual were to choose not to attend college, the employer would believe that he or she must be low ability, and would o §er a wage of 0.

  6. (f) If the employer observes that an individual attended college, what is his belief about the individ- ualiÌs ability? What wage will he o §er to college graduates? (Hint: The employer expects that all individuals attend college. This means that attending college conveys no information about the individualiÌs true ability).

  7. (g) Given the wages paid to college graduates (and the wage that would be paid to non-grads) would the high-ability individual choose to attend college? For which values of a would the low ability individual choose to attend college?

  8. (h) In a pooling equilibrium, both high and low ability individuals attend college. For which values of a is this expectation consistent with the individualsiÌstrategies?

    Finally, consider a sem-separating equilibrium in which high-ability individuals attend college (for sure), but low ability students attend college with probability 0 < s < 1:

  9. (i) If the employer sees that an individual attends college what is his belief that the individual is high-ability? What is the wage to college graduates? (Hint: Remember, all high ability individuals attend, but low ability individuals attend with probability s. Divide the probability of an individual being high ability and attending college by the overall probability of an individual attending college).

  1. (j) If the employer sees that an individual did not attend college, what are his beliefs about the individualiÌs ability? (Hint: all high ability individuals attend college)

  2. (k) The low-ability individual is willing to randomize between attending college and not attending college. Use this to Önd the probability that the low-ability individual attends in equilibrium.

    Bonus: Comment on the purpose of college illustrated in this example. How is this purpose a §ected as college becomes easier for the low-ability type (i.e. as a increases)?

. Vouchers to Pay Private School
Tuition
Two conditions that justify government intervention in a market are the presence of external benefits and equity concerns. Both of these issues are present in the case of primary and secondary education in the United States. Think about what education without government education would look like. In the absence of government intervention, all primary and secondary education in the US would be private. Public school districts would not exist. Parents would need to pay private firms (schools) to educate their children.

External benefits

If all education were private, it’s likely that people would buy too little education, from society’s point of view. External benefits are one reason. When a child is educated, he or she benefits and we expect his or her parents to take those benefits into account when they purchase education. But there are additional benefits to society which parents may ignore. As people become more educated, they are less likely to be unemployed or be criminals and are more likely to volunteer and vote. The presence of these external benefits is an example in support for the government getting involved in education.

Equity

Many families in the United States have low incomes. Among all children in first through twelfth grades in 2001, 46% were from families with incomes below $40,000. Since the cost of private education would be an important share of these families’ incomes, most Americans would be concerned about the fairness of relying on markets to decide how much education children receive. Current spending by these families on private education provides some support for this concern. Of all children in private school in 2001, only 25% were from families with incomes below $40,000. Therefore, equity concerns are another example in support for government getting involved in education.

Providing vs. producing education

Most economists think external benefits and equity concerns justify government intervention in education. But it is important to distinguish between government production of education and other forms of government intervention. At the level of elementary and secondary education, K- 12 education, government intervention today mostly means production of education by local school districts. To benefit, children must attend public schools. But this is not the only form intervention could take.
There are other markets where government intervention takes the form of subsidizing people’s access to products—think of financial aid to college students, for example. Many people in the US think that government should move from producing education to subsidizing access.

One form that subsidy could take is government providing vouchers to parents. Parents would use the voucher to help pay for their child’s education in a private school. After it receives the voucher, the school would turn it in and be paid by a local or state government.

Today there is a lively debate between people who think K-12 education should be delivered publicly and people who think quality and efficiency would be higher if government provided vouchers and the education was delivered by private schools. Some of these quality and efficiency arguments can be based on material we covered this week. Price competition between private schools will pressure each one to produce efficiently. Competition for students will lead private schools to offer programs of interest to parents and their children.

Answer the questions below and make use of the sources supplied. Be sure to cite you sources in your answers.

1. Explain whether a potential exit by students with vouchers will lead to the improvement of public schools. 2. Discuss whether the implementation of vouchers will lead the best students to leave public school, which could lead to a decline in education for the students left behind in the public schools. 3. Consider what might happen to the students who use vouchers to leave public schools in order to attend private schools. How might their academic performance change as a result of switching? 4. Finally, think about the impact of a voucher system on the students in an urban setting. Describe whether all families would have an equal opportunity to access education.

Your final product will be a paper that: ? Addresses each of the four questions above in total. ? Is APA formatted. ? The body is to be 2 pages minimum.

The requirements for your assignment are: 1. Answer each question fully 2. Define the overall subject of each question. 3. Cite at least three (3) resources from this week’s materials.

PROVIDE A RESPONSE OR STATEMENT TO THIS STUDENTS DISCUSSION:

1 - Please share your experience on selecting a managed care plan. Please discuss the advantages and disadvantages of your MCO plan.

Up until about ten years ago my company offered an HMO MCO plan option managed by Kaiser Permanente. This plan was less expensive in my paycheck deduction and offered $10 co-pays for every office visit and 100% hospitalization. In 1992 as a single young man in my twenties I found this option very attractive. I ended up getting married early that year, had a flu episode and a bout of food poisoning. My wife ended up with a hospitalization as well. What looked good on paper ended up being a very restricted healthcare experience. My office visits were restricted to only one clinic where the health care professional point of contact were physicians assistants under the supervision of an MD which we never saw. All of the prescriptions were for generic medicines and when my wife was hospitalized she was not allowed branded medicines either. We also thought she was discharged too early. The advantages of this type of plan are costs and simplicity. If we had not been sick that year we probably would have signed back up for it. The disadvantages were that our level of care was reduced to a less skilled health care professional and the attending physician who cared for my wife in the hospital discharged my wife early due to a time limit the HMO had placed on the length of stay for her illness code. That was the first and last year I chose an MCO plan for my health coverage.

2 - Many argue that there is no consistent, direct correlation between the cost of care and its quality in a managed care program. Do you agree or disagree?

In my personal experience managed care plans attempt to lower the primary care contact to non MD health care professionals such as Nurse Practioners and Physicians Assistants. While these clinicians are well trained and certainly have their appropriate place in medicine, they do not have the extensive medical training that MDs and DOs spend a minimum of 8 years mastering. These clinicians cost less than MDs and are very attractive way to reduce staffing costs. As a patient however I prefer the highest skilled level clinician caring for me and my family and am willing to pay more for this higher level of care. In my opinion Kaiser Permanente may have saved money but I was not happy with the level of care and medicines provided. They may have saved money that year but they lost me as a customer. Epstein et al, (2014) compared Accountable Care Organization (ACO) patients with non ACO patients and while they found that there were many differences in spending, age, and severity of illness, there was no difference in quality metrics despite non ACO members costing more overall. It would seem that in this example costs can be lowered without affecting quality outcomes. However ACO participants had access to significantly more participating clinicians and hospitals. What is missing from this study is a patient survey comparing the satisfaction of ACO and non-ACO patients.

3 - Do you think patients' choice of provider and access to care will be limited under ACOs?

In my personal experience and through observations of managed care offices and hospitals as a pharmaceutical representative, ACOs not only restrict the choice of provider and access to hospitals they utilize lesser trained medical professionals in Primary Care, Specialty and Hospitals in addition to restricting access to branded medications. This observation is in agreement with Epstein et al, (2014) in which ACO members cost less but had less access and choice of participating access points and clinicians.

4 - In what ways can an ACO succeed in both delivering high-quality care and spending health care dollars more wisely?

ACOs can be very useful in curbing costs. For those with limited health care budgets or those patients who receive public assistance an ACO model whether public or private. However Lewis et al, (2014) found that even though there was an almost even split between ACOs contracting for private and public contracts in the U.S.A., public contracts were less profitable than private ones due to public patients costing more to manage per capita than private ones. Quality was not examined. It would seem that an ACO would be ideal when faced with limited resources but ACOs may be reluctant to engage in contracts that are less profitable.

Weekly leaderboard

Home
Homework Help 3,900,000
Economics 400,000
Start filling in the gaps now
Log in