-The Table Above Provides Information About the Marginal Private Benefit

question 110

Multiple Choice

-The table above provides information about the marginal private benefit of education. The marginal private cost, which also equals the marginal social cost, of educating a student is $16,000 per year and does not change as more students are educated. There is an external benefit from education that is equal to $12,000 per student year and does not change as more students are educated. If the market for education is competitive and unregulated, the equilibrium quantity of education will be ________ and the tuition will be ________.

• A) 20,000 student-years; $20,000
• B) 40,000 student-years; $16,000
• C) 60,000 student-years; $12,000
• D) 80,000 student-years; $8,000

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Definitions:

Retail Inventory Method

An accounting procedure for estimating inventory value by applying a percentage cost-to-retail price.

Inventory Value

The total cost or market value of all items held in inventory, including raw materials, work-in-progress, and finished goods.

FIFO Cost Flow Assumption

An inventory valuation method where goods purchased first are the first sold, assuming costs are charged in the order in which they are incurred.

LIFO Cost Flow Assumption

An inventory valuation method that assumes the last items added to inventory are the first sold, affecting the cost of goods sold and ending inventory value.