The Figure Above Shows the Supply Curve (S) and the Demand

question 47

Multiple Choice

The figure above shows the supply curve (S) and the demand curve (D) for university education. The external benefit from university education is $6,000 per student per year and is constant.
-In the figure above, with no government involvement and if the universities are competitive, what is the deadweight loss?

• A) $6 billion per year
• B) $12 billion per year
• C) $4 billion per year
• D) Zero

---

Definitions:

Budget Constraint

A budget constraint outlines the combinations of goods and services that a consumer can purchase given their income and the prices of those goods and services.

DVDs

Digital Versatile Discs, a type of optical storage media used for video, audio, and data storage, now surpassed by digital streaming and download technologies.

CDs

Compact Discs, a digital optical disc data storage format used for storing audio, video, and data.

Budget Constraint

The limitation on the consumption bundles that a consumer can afford given their income and the prices of goods.