-The above figure shows the marginal private benefit and marginal social cost of a college education. If society's external benefits from college graduates is $10,000 each, then
A) a subsidy of $10,000 per student paid to colleges will achieve efficiency.
B) a tax of $10,000 per student imposed on the colleges will achieve efficiency.
C) 10 million students per year is the efficient number students.
D) None of the above answers are correct.

Question

-The above figure shows the marginal private benefit and marginal social cost of a college education. If society's external benefits from college graduates is $10,000 each, then
A) a subsidy of $10,000 per student paid to colleges will achieve efficiency. 
B) a tax of $10,000 per student imposed on the colleges will achieve efficiency. 
C) 10 million students per year is the efficient number students. 
D) None of the above answers are correct.

Quizplus · Accepted Answer

A subsidy of $10,000 per student will internalize the external benefit, aligning private incentives with social efficiency.

-The Above Figure Shows the Marginal Private Benefit and Marginal