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Pages 3 (753 words)
From the objection that has been provided in the statement at hand, we can clearly see that the cities in question are facing the perennial problem of the slippery slope: the loss of one unit of ration is very quickly followed by the loss of another unit. Therefore, loss is one ration is closely followed by a mass exodus of units, which in this case is the decrease in population and the subsequent income that was to be earned by the city through these residents…
Let us look at a graphical interpretation:
Now, the initial equilibrium of education lies at the point S1 where the cost of education comes to $3000. Now, for this example we will suppose that the subsidy that will be provided, assuming that it is portable which would ensure that the sorting of schools in the city would not remain an endogenous variable in this matrix, will move the budget line from MN to M'N'. Therefore, with the voucher system the increase in education from S1 to S2 will cost around $200, an amount which will be covered by the subsidy that is provided by the government via this voucher system as the new equilibrium is now at S2. Due to the portability factor of the voucher i.e. the voucher can be used anywhere in the city, the link between the quality of the education that is provided to children and the location of the public school ceases to exist as families do not have to relocate to the urban city centers now in order to ascertain better levels of education for their children. ...
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