-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 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.

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 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.

Quizplus · Accepted Answer

The marginal social benefit curve accounts for both the private benefits and the external benefits to society. Since the external benefits are $10,000, the marginal social benefit curve lies $10,000 above the private marginal benefit curve.

-The Above Figure Shows the Marginal Private Benefit and Marginal