The table gives information about the marginal benefit and marginal cost of a tr
ID: 1111400 • Letter: T
Question
The table gives information about the marginal benefit and marginal cost of a trade school education.
What is the value of the voucher that the government must provide to result in the efficient number of trade school students enrolled?
The efficient number of trade school students will enroll if the government provides vouchers worth $______ per student per year.
>>> Remember that the amounts in the table are given in thousands of dollars.
Quantity
(thousands of students per year)
Marginal private benefit
Marginal social benefit
Marginal
cost
(thousands of dollars per student per year)
1
10
13
10
2
9
12
10
3
8
11
10
4
7
10
10
5
6
9
10
Quantity
(thousands of students per year)
Marginal private benefit
Marginal social benefit
Marginal
cost
(thousands of dollars per student per year)
1
10
13
10
2
9
12
10
3
8
11
10
4
7
10
10
5
6
9
10
Explanation / Answer
Answer
The government voucher should shift the marginal private benefit curve to marginal social benefit curve and that is possible by $3000 benefit because the $3000 is a difference between MPB and MSB at all levels of students.
$3000
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