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.At what level should tuition be set to ensure the efficient number of students?
A) $10,000
B) $5,000
C) $20,000
D) $25,000
E) $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.At what level should tuition be set to ensure the efficient number of students?
A) $10,000 
B) $5,000 
C) $20,000 
D) $25,000 
E) $15,000

Quizplus · Accepted Answer

Tuition should be set at the point where the marginal cost of education equals the marginal benefit of education. In this case, the marginal cost of education is $10,000, so tuition should be set at $10,000 to ensure the efficient number of students.

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