-The Table Above Provides Information About the Marginal Private Benefit

question 415

Multiple Choice

-The table above provides information about the marginal private benefit for 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 government subsidizes education, how much should the subsidy be in order to attain the efficient level of enrollment?

• A) $4,000
• B) $8,000
• C) $12,000
• D) $16,000

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Definitions:

Labor Force

The total number of people employed or actively seeking employment within an economy.

Yield Per Acre

The amount of a particular crop produced on one acre of land, measuring agricultural productivity.

Corn

A cereal plant that yields large grains, or kernels, set in rows on a cob, widely grown for food, livestock feed, and biofuel.

Production Possibility Frontier

A curve depicting all maximum output possibilities for two goods, given a set of inputs consisting of resources and other factors. The PPF demonstrates the trade-offs in production volume between two choices.