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

question 437

Multiple Choice

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

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

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Definitions:

Pricing

The process of determining what a company will receive in exchange for its products or services.

Profitability

The state or condition of yielding financial gain or profit.

Forward Buying

The practice of purchasing larger quantities of goods than immediately needed, usually to take advantage of discounted prices or to ensure supply.

Peak Period

Times when demand for goods or services is at its highest, often requiring additional resources or strategies to meet customer needs.