If Tom’s marginal benefit from a cigar a day is $25 and Larry’s marginal benefit from a smoke­free environment is $20 a day, what is the outcome if they meet at Tom’s home? What is the outcome if they meet at Larry’s home?

Use Table 3 and the following information to work Problems 6 to 8.

The marginal cost of educating a college student is $5,000 a year. Table 3 shows the marginal benefit schedule from a college education. The marginal external benefit from a college education is a constant $2,000 per student per year. There are no public colleges.