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The graph shows the demand for university education. The marginal cost of educating a student is a constant $ 4 , 0 0 0 a
The graph shows the demand for university education. The marginal cost of educating a student is a constant $ a year and education creates an external benefit of a constant $ per student per year.
If all universities are private and the government offers vouchers to those who enroll, calculate the value of the voucher that will achieve the efficient number of students.
Draw the marginal social benefit curve. Label it MSB
Draw an arrow at the efficient number of students that shows the value of the voucher that achieves the efficient number of students.
The value of the voucher that achieves the efficient number of students is $ a student. Remember that the price given on the axis is in thousands of dollars.
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