Use the figure below to answer the following questions.

Figure 16.3.3
-Refer to Figure 16.3.3. The figure shows the marginal private benefit and marginal social cost of a university education. If society's external benefit from university graduates is $10,000 each, then the
A)marginal social cost curve lies $10,000 to the left of the private marginal benefit curve.
B)marginal social cost curve lies $10,000 to the right of the private marginal benefit curve.
C)marginal social benefit curve lies $10,000 below the private marginal benefit curve.
D)marginal social benefit curve lies $10,000 above the private marginal benefit curve.
E)marginal social benefit curve is horizontal.

Question

Use the figure below to answer the following questions.
  
Figure 16.3.3
-Refer to Figure 16.3.3. The figure shows the marginal private benefit and marginal social cost of a university education. If society's external benefit from university graduates is $10,000 each, then the
A)marginal social cost curve lies $10,000 to the left of the private marginal benefit curve. 
B)marginal social cost curve lies $10,000 to the right of the private marginal benefit curve. 
C)marginal social benefit curve lies $10,000 below the private marginal benefit curve. 
D)marginal social benefit curve lies $10,000 above the private marginal benefit curve. 
E)marginal social benefit curve is horizontal.

Quizplus · Accepted Answer

The marginal social benefit curve lies $10,000 above the private marginal benefit curve because the external benefit adds to the private benefit, increasing the total benefit to society.

Use the Figure Below to Answer the Following Questions