Figure 1 shows the marginal private benefit from college education at an imaginary college.The marginal cost of a college education in this example is a constant $6,000 per year.The marginal external benefit from a college education is $4,000 per student per year. (data in the picture)

a)If colleges were private and government had no involvement in college education, how many people will undertake a college education, and what will be the tuition?

b)What is the efficient number of students?

c)Explain why positive externalities lead to inefficient underproduction and how public provision, subsidies vouchers and patents can achieve a more efficient outcome.

Heading 2 Title Paragraph 3 Styles 1 . 9 . 1 . 10 . 1 . 11 . 1 . 12 . 1 . 13 . 1 . 14 . 1 . 15 1 . 16 . 1 17 college. The marginal cost of a college education in this example is a constant $6,000 per year. The marginal external benefit from a college education is $4,000 per student per year. FIGURE 1 $10,000 $9,000 $8,000 $7,000 PRICE OF TUITION $6,000 $5,000 $4,000 $3,000 $2,000 4,500 5,000 1,000 1,500 2,000 2,500 3,000 3,500 4,000 STUDENTS PER YEAR a) If colleges were private and government had no involvement in college adertake a college education, and what will