-MB private External Benefit MC MB social 40 30 25 20 2 15 10 0 1 2 3 4 5 6 78 9

Question

-MB private External Benefit MC MB social 40 30 25 20 2 15 10 0 1 2 3 4 5 6 78 9 10 11 12 13 14 15 16 17 18 19 20 Quantity (years of college education) Question 11: Cameron is a bright high school senior who is thinking about going to college. The figure above illustrates his private marginal benefits (MB private) and marginal costs (MC) of going to college. Cameron's community derives benefits from Cameron's education, as illustrated by the External Benefit curve above. Given this information, the privately optimal quantity of college for Cameron to attain is C 1) 10 years C 2) 4 years C 3) 8 years C 4) 20 years

Explanation / Answer

Correct option is (3).

Privately optimal outcome is at the intersection of MB private and MC curves, where number of years is 8 and corresponding MB is $16 approximately.

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