Question

This Question: 1 pt 41 of 60 (39 complete) This Test: 60 pts possib The graph shows the demand for nursing education The marginal cost of nursing education is $8,000 a year and the marginal external benefit is $4,000 per student per year. Suppose the government provides a subsidy that achieves the efficient number of students in private nursing schools. What is the subsidy that will achieve the efficient number of students enrolled? The subsidy that achieves the efficient number of students is $ >Remember that the price given on the y-axis is in thousands of dollars. Price and cost (thousands of dollars) 16- 12- S MC D-MB 00一一10-20-30-40-50-60 Students (thousands per year)

Answer 1

Solution:

The efficient number of students is calculated where Marginal Benefit = Marginal Cost

Marginal cost = $8000 and Marginal Benefit = $4000

Now, if the government provides subsidy of $4000 then the supply curve would shift down.

The point where MB = MC, the efficient number of students = 50000

And the required subsidy = $4000