Question

Why does the quantity of public college education determined in a free market (without government intervention) represent a market failure?

Answer 1

Because the equilibrium quality chosen by the market would be lower than the level that most people would consider desirable, the quantity of public college education determined in a free market (without government intervention) is a market failure.

How does government intervention lead to a collapse of the market?

• Lack of information, market regulation, public goods, and externalities can all contribute to market failure.
• Government intervention, such as new laws, taxes, tariffs, subsidies, and trade restrictions, can be used to fix market failures.

How does the market for education fail?

• Due to systematic undervaluation of the roles of motivation and engagement by educational policy, there is a significant market failure in the context of education.
• Lack of metrics for those qualities and ignorance of their potential usefulness serve as examples of this undervaluation.

Learn more about market failures

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