The figure above shows the demand for college education (D), the marginal social benefit of college education (MSB), and the marginal cost of the private schools (MC).
-The figure above shows that at the unregulated market equilibrium,marginal social benefit ________ marginal cost,and the number of students enrolled is ________.
A) exceeds; above the efficient quantity
B) exceeds; below the efficient quantity
C) is below; above the efficient quantity
D) is below; below the efficient quantity
E) equals; efficient

Question

The figure above shows the demand for college education (D), the marginal social benefit of college education (MSB), and the marginal cost of the private schools (MC).
-The figure above shows that at the unregulated market equilibrium,marginal social benefit ________ marginal cost,and the number of students enrolled is ________.
A) exceeds; above the efficient quantity 
B) exceeds; below the efficient quantity 
C) is below; above the efficient quantity 
D) is below; below the efficient quantity 
E) equals; efficient

Quizplus · Accepted Answer

At the unregulated market equilibrium, MSB (marginal social benefit) is above MC (marginal cost), which means that society values an additional student more than it costs to provide education for them, but the private schools only take into account their own private costs and benefits, resulting in a quantity of students that is below the efficient quantity. Choice B accurately reflects this situation.

The Figure Above Shows the Demand for College Education (D)