Economics of Education Flashcards
1
Q
Opportunity costs of education
A
- Measured as a value of foregone earnings
- Low for K-12 (not many jobs)
2
Q
Direct costs
A
- Include tuition, fees, books, supplies, and other items necessary for school
3
Q
Marginal costs
A
- To determine optimal leve,understand MC
- Increased costs associated with obtaining an additional year of eduction
- As education increases, MC of education increases
4
Q
Human capital
A
- Acquired skills and knowledge that make one more productive
5
Q
Positive externalities
A
- Benefits received by third parties
6
Q
Negative externalities
A
- Costs imposed on third parties
7
Q
Private marginal benefits
A
Accrue only to individual obtaining education
8
Q
Social marginal benefits
A
MB that accrue to society as a whole
9
Q
MBsocial equation
A
MBsocial = MBprivate + External Benefits
