Notesale: Turn your study into money

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Assessment of the case for financing
Universities mainly through charging fees to
their students
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A merit good is a good for which the social benefits of consumption
are greater than the private benefits
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In previous years the
government would cover the costs through government spending and
taxation
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This is market
failure as its a merit good and the government is concerned as it
wants to maximise consumption
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Partly this is because individuals do
not understand or appreciate the social benefits that can result from
consumption
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Government could intervene in the form of subsidies by giving money
to the Universities raised from tax income to deplete the cost of tuition
fees or remove them altogether for the students
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Previous to 1998
Universities were financed in this method and before 2012 the tuition
costs were much lower then they are now
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Price changes send contrasting message to consumers and
producers about to enter or leave a market
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However with
prices remaining high and university status becoming more and more
less meaningful more people are deferred from attending yearly
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In the long run the government and society as a whole would benefit
from the positive externalities and social benefits of an increase of
educated personnel brought about by the removal of charging the
students university fees and instead using taxation money to fund the
university
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In the case of leaving market forces to provide a solution as well there
are various strengths such as If market forces determine prices, this
means it is a competitive market
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This
means that no economic welfare is lost through inefficiency
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However universities
will not be making abnormal profits so are unlikely to be dynamically
efficient
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The same is true for the
reverse situation with demerit goods
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As in these times of slow
economic growth and large debt there will be no excessive taxes or
spending cuts also recent evidence suggests that until 2011 at least,
despite fees being charged, university applications continue to
increase across all income groups
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