-The table above provides information about the marginal private benefit of education. The marginal private cost, which also equals the marginal social cost, of educating a student is $16,000 per year and does not change as more students are educated. There is an external benefit from education that is equal to $12,000 per student year and does not change as more students are educated. If the market for education is competitive and unregulated, the equilibrium quantity of education will be ________ and the tuition will be ________.
A) 20,000 student-years; $20,000
B) 40,000 student-years; $16,000
C) 60,000 student-years; $12,000
D) 80,000 student-years; $8,000

Question

-The table above provides information about the marginal private benefit of education. The marginal private cost, which also equals the marginal social cost, of educating a student is $16,000 per year and does not change as more students are educated. There is an external benefit from education that is equal to $12,000 per student year and does not change as more students are educated. If the market for education is competitive and unregulated, the equilibrium quantity of education will be ________ and the tuition will be ________.
A) 20,000 student-years; $20,000 
B) 40,000 student-years; $16,000 
C) 60,000 student-years; $12,000 
D) 80,000 student-years; $8,000

Quizplus · Accepted Answer

In a competitive and unregulated market, the equilibrium quantity is where marginal private benefit equals marginal private cost. Since the marginal private cost is $16,000, the equilibrium quantity is where the marginal private benefit is also $16,000, which is at 40,000 student-years.

-The Table Above Provides Information About the Marginal Private Benefit