Education Privatization and School Choice

Final Exam Essay
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Final Exam Essay
Section A: Short Questions
Question 1
According to the Massachusetts Education Law of 1647, guardians, caregivers, and parents have a role in educating their kids. This education-related legislation was also referred to as the "Old Deluder Satan Act" after being approved in Massachusetts Bay in the 17th century (Parker, 1960). It expected areas with more than 50 families to form public schools. On the other hand, areas having fewer families were to enroll their kids in an adjacent area’s school. The requirement argued that the intention of forming schools was to enable “public and private happiness” and reduce ignorance among the children. Therefore, guardians, caregivers, and parents were responsible for caring for the children educationally.
Question 2
It is not correct that Milton Friedman perceived that a voucher plan would encourage class and racial segregation in learning institutions, intensify racial disagreements and promote separated communities. This is because Friedman was only an eminent economist who supported school vouchers (government-sponsored incentives to enable parents or guardians to select a school for their kids). Specifically, he claimed that these vouchers were meant to develop the education sector by intensifying competition among schools and allowing parents control over their kids’ learning. He also believed that students from marginalized groups accessing these vouchers would allow to get quality education and perform well in the long run (Friedman, 1973).
Question 3
It is true that keeping the marginal costs or expenses low requires monopolies to have a significant incentive to innovate. Unlike other firms operating in a competitive industry, monopolies never face the fear of facing competition because they solely provide their products and services in a less or no competitive environment (Davis & Orhangazi, 2021). Despite the unlikelihood of experiencing significant competition, monopolies still need to prioritize innovating, especially in this evolving world, to decrease their expenses and expand their profits considerably. For instance, a monopoly might need to capitalize on research and development to locate more relevant production or operational strategies that can reduce its marginal costs. The innovation might also allow the monopolies to sustain their industry dominance and remain ahead in case potential rivals pop up.
Question 4
It is correct that analyzing a voucher program's equilibrium effects would consider spillovers or the impact that the program poses on the overall economy. These programs always have several goals, including enhancing market effectiveness, intensifying access to specific services or products, etc. In the education setting, when a voucher program results in a rise in education services’ demand, it could stimulate a relative rise in these services’ prices. The action would affect people at individual and household levels, including those not utilizing the vouchers. Additionally, it could affect the education providers' behavior. They might react to the risen demand by increasing their capacity or providing more advanc...