Suppose a family (with 1 child) earns $50,000 per year and there is no publicly provided education. Assume the price of other goods is $2,000 and the price for education/ year is $5,000.
Draw the family's budget constraint.
Show how free public education worth $20,000 per student changes the budget constraint.
Draw a set of indifference curves to show that the family increases education consumption after b.
Show how a school voucher redeemable for $20,000 worth of education changes the family's budget constraint. What happens to the amount of education the family purchases for the child?