-The above figure shows the marginal benefits and marginal costs of a college education. If a subsidy of $5,000 is paid to the colleges, then colleges charge tuition of
A) $0.
B) $5,000.
C) $10,000.
D) $15,000.

Question

-The above figure shows the marginal benefits and marginal costs of a college education. If a subsidy of $5,000 is paid to the colleges, then colleges charge tuition of
A) $0. 
B) $5,000. 
C) $10,000. 
D) $15,000.

Quizplus · Accepted Answer

The subsidy of $5,000 will shift the marginal cost curve down by $5,000. The new equilibrium will be at the intersection of the new marginal cost curve and the marginal benefit curve. At this new equilibrium, the tuition will be $5,000.

-The Above Figure Shows the Marginal Benefits and Marginal Costs