Assume that spending more on a student\'s education increases his/her productivi
ID: 1200371 • Letter: A
Question
Assume that spending more on a student's education increases his/her productivity and future wages. Further, assume this effect is subject to diminishing returns (ie: the first $1 spent has a greater effect than the last $1 spent). Finally, assume there are equal numbers of two types of students: more able students, and less able students. The relationship between education and productivity/wages for each type of student is shown in the diagram below. Assume you want to maximize total output in society for any given level of expenditure. How would you allocate educational expenditures between more able students and less able students? Carefully explain your reasoning. Assume you want to reduce inequalities in income for any given level of expenditure. Now how would you allocate educational expenditures between more able students and less able students? Carefully explain your reasoning.Explanation / Answer
a. first i will forecast the demand for educated people to a work and based on the demand i will make to plan for education. if the need is more, then many of the students will go for education, if the demand is less, by putting some eligible norms i will stop them to go for higher education. at the end the economy output is important.
b. then i will work on to minimize the gap between payments to educated people and uneducated or less educated people. then automatically people wont prefer to go for higher studies and they prefer to go for work. then the gap between these payments will come downs.