-The figure above shows the market for education,a good possessing an external benefit.In order to attain the efficient number of students,a government subsidy must equal ________ per student.
A) $2,000
B) $8,000
C) $6,000
D) $10,000
E) $16,000

Question

-The figure above shows the market for education,a good possessing an external benefit.In order to attain the efficient number of students,a government subsidy must equal ________ per student.
A) $2,000 
B) $8,000 
C) $6,000 
D) $10,000 
E) $16,000

Quizplus · Accepted Answer

The correct answer is determined by the difference between the social value and the private value of education per student. The external benefit, or the difference between the social and private values, represents the amount that needs to be subsidized to achieve the efficient outcome. If the subsidy per student equals the external benefit, it will shift the private demand curve to align with the social value, leading to an efficient number of students.

-The Figure Above Shows the Market for Education,a Good Possessing