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).
-Using the figure above,suppose education is provided by public colleges,where tuition is set at $10,000 a year.Then,________ million students are enrolled,and the taxpayers cover ________ of the marginal cost per student.
A) 15; $15,000
B) 7.5; $5,000
C) 3.5; none
D) 15; $25,000
E) 7.5; $15,000

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).
-Using the figure above,suppose education is provided by public colleges,where tuition is set at $10,000 a year.Then,________ million students are enrolled,and the taxpayers cover ________ of the marginal cost per student.
A) 15; $15,000 
B) 7.5; $5,000 
C) 3.5; none 
D) 15; $25,000 
E) 7.5; $15,000

Quizplus · Accepted Answer

At a tuition of $10,000 a year, 15 million students are enrolled. Taxpayers cover the difference between the tuition paid by students and the actual cost to educate them, which is $25,000 per student, making the taxpayers' contribution $15,000 per student.

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