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ECON1101 Economics of Child Care Provision

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Economics of Child Care Provision (ECON1101)

   

Added on  2020-05-11

ECON1101 Economics of Child Care Provision

   

Economics of Child Care Provision (ECON1101)

   Added on 2020-05-11

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The Economics of Child Care Provision in Australia1THE ECONOMICS OF CHILD CARE PROVISION IN AUSTRALIAStudent by (Name)Professor’s (Name)CollegeCourseDate
ECON1101 Economics of Child Care Provision_1
The Economics of Child Care Provision in Australia2THE ECONOMICS OF CHILD CARE PROVISION IN AUSTRALIAIntroduction The content of this paper is about the economics of child care provision in Australia.The content analyses an economic case study as posted on the ABC news website where the highcost of managing children at children service centers has been noted.. Part A: Welfare Implications of Subsidy and Justification of the SubsidyA subsidy according various sources is any form of support offered by thegovernment to consumers and producers and can either be financial or in any other form.Provision of a government subsidy to any sector has economic as well as welfare implications toboth the consumers and producers which in this case are parents and child care center owners.The graph explains to what extent does the government policy can feed through in order to theprice of child care in Australia (Early Childhood Education Policies in Asia 2016). Theconsumers in a market with an inelastic demand curve as shown in the first diagram belowbenefits greatly from a government subsidy compared to those in a market with relatively elasticdemand curve. When the a market has a perfectly inelastic, consumers which in this case are the parentswould have gained more benefits from the Australian government subsidy as the subsidyreleased is passed onto the parents of the children via a lower prices of the child care servicesoffered by the producers or sellers of child care services (Early Childhood Education Policies inAsia 2016). In situations where the market demand is relatively price elastic, the mainimplication of a government subsidy is to upsurge the equilibrium quantity being offered in the
ECON1101 Economics of Child Care Provision_2
The Economics of Child Care Provision in Australia3market which in our case is child care services instead of lowering the market prices asillustrated in figure two of the diagram below. On the other hand when discussing the welfare implication of a government subsidy otherissues apart from the common effect on the quantity and prices should be considered (EarlyChildhood Education Policies in Asia 2016). The well-fare implication of the subsidy can bewell explained through an economic models as in the figure below marked from A-H.In a free market such as the child care service market in Australia, the regions marked(A&B) combined as one indicates the consumer surplus in the market. This is because the region
ECON1101 Economics of Child Care Provision_3

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