Use the figure below to answer the following questions. Figure 15.3.3
-Refer to Figure 15.3.3.The figure shows the marginal private benefit and marginal social cost of a university education.If society's external benefit from university graduates is $10,000 each,then the
A)marginal social cost curve lies $10,000 to the left of the private marginal benefit curve.
B)marginal social cost curve lies $10,000 to the right of the private marginal benefit curve.
C)marginal social benefit curve lies $10,000 below the private marginal benefit curve.
D)marginal social benefit curve lies $10,000 above the private marginal benefit curve.
E)marginal social benefit curve is horizontal.

Question

Use the figure below to answer the following questions.  Figure 15.3.3
-Refer to Figure 15.3.3.The figure shows the marginal private benefit and marginal social cost of a university education.If society's external benefit from university graduates is $10,000 each,then the
A)marginal social cost curve lies $10,000 to the left of the private marginal benefit curve. 
B)marginal social cost curve lies $10,000 to the right of the private marginal benefit curve. 
C)marginal social benefit curve lies $10,000 below the private marginal benefit curve. 
D)marginal social benefit curve lies $10,000 above the private marginal benefit curve. 
E)marginal social benefit curve is horizontal.

Quizplus · Accepted Answer

The marginal social benefit (MSB) curve incorporates the external benefits to society, which in this case are $10,000 for each university graduate. Therefore, the MSB curve would lie $10,000 above the marginal private benefit (MPB) curve, reflecting the additional benefits to society that are not captured by the private benefits alone.

Use the Figure Below to Answer the Following Questions