-The figure above shows the marginal social costs (MSC) , marginal private benefits (MB) , and marginal social benefits (MSB) of university education in Inland. If Inland's government provides a voucher per student equal to the marginal external benefit of university education, then _______ million students will attend university, and universities will collect _______ per student from the voucher.

Question

Quizplus · Accepted Answer

The voucher should equal the marginal external benefit, which is the difference between MSB and MB at the socially optimal quantity. At 0.8 million students, the MSB equals MSC, indicating the socially optimal quantity, and the difference between MSB and MB is $2,000.

-The Figure Above Shows the Marginal Social Costs (MSC), Marginal