-The marginal cost of educating a student is $30,000, and this cost is independent of the number of students. The figure above shows the marginal private benefit that a student receives from education. An independent government agency determines that the efficient number of students is 40,000. What is the marginal social benefit from education?
A) It depends on the demand.
B) $20,000
C) $10,000
D) $40,000

Question

-The marginal cost of educating a student is $30,000, and this cost is independent of the number of students. The figure above shows the marginal private benefit that a student receives from education. An independent government agency determines that the efficient number of students is 40,000. What is the marginal social benefit from education?
A) It depends on the demand. 
B) $20,000 
C) $10,000 
D) $40,000

Quizplus · Accepted Answer

The marginal social benefit is the sum of the marginal private benefit and the marginal external benefit. The marginal external benefit is the benefit that a student receives from education that is not captured by the student himself. In this case, the marginal external benefit is the benefit that society receives from having a more educated population. The marginal social benefit is therefore $20,000, which is the sum of the marginal private benefit of $10,000 and the marginal external benefit of $10,000.

-The Marginal Cost of Educating a Student Is $30,000, and This