The figure shows the supply curve (S) and the demand curve (D) for college education. The external benefit from college education is $6,000 per student per year and is constant.
-In the figure above, if the government gives a voucher equal to $3,000 per year to each college student, how many students will be accepted?
A) 8 million per year
B) 12 million per year
C) 10 million per year
D) 14 million per year

Question

The figure shows the supply curve (S) and the demand curve (D) for college education. The external benefit from college education is $6,000 per student per year and is constant.
-In the figure above, if the government gives a voucher equal to $3,000 per year to each college student, how many students will be accepted?
A) 8 million per year 
B) 12 million per year 
C) 10 million per year 
D) 14 million per year

Quizplus · Accepted Answer

The voucher increases the demand for college education, shifting the demand curve to the right. The new equilibrium, where the supply and demand curves intersect, will determine the number of students accepted, which is 10 million per year.

The Figure Shows the Supply Curve (S) and the Demand