-The figure above shows the market for university education. If the market for education is competitive and with no government intervention, the equilibrium quantity of university students is ________ million and the efficient quantity of university students is ________ million.
A) 4; 8
B) 2; 4
C) 8; 4
D) 0; 10
E) 8; 2

Question

-The figure above shows the market for university education. If the market for education is competitive and with no government intervention, the equilibrium quantity of university students is ________ million and the efficient quantity of university students is ________ million.
A) 4; 8 
B) 2; 4 
C) 8; 4 
D) 0; 10 
E) 8; 2

Quizplus · Accepted Answer

In a competitive market with no government intervention, the equilibrium quantity is where the supply and demand curves intersect. This point represents the quantity at which the price buyers are willing to pay matches the price sellers are willing to accept. The efficient quantity, on the other hand, is where the marginal social benefit equals the marginal social cost, often represented by the intersection of the demand curve (marginal social benefit) and the supply curve (marginal social cost). Without the specific figure, we typically assume the equilibrium quantity is efficient. However, based on the given options and typical scenarios where externalities or public goods are involved (like education), there can be a discrepancy between the equilibrium and efficient quantities. Given the options, A) 4; 8 suggests that while the market settles at 4 million students, the socially optimal (efficient) number of students would be higher, at 8 million, possibly due to the positive externalities associated with education that are not accounted for in the market equilibrium.

-The Figure Above Shows the Market for University Education