What is the efficient number of students? If colleges are private (no government involvement), how many people enroll, what is the tuition, and what is the deadweight loss?

Figure 1 shows the marginal private benefit from college education. The marginal cost of a college education is a constant $6,000 a year. The marginal external benefit from a college education is a constant $4,000 per student per year.

Figure 1

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FIGURE 1 Cost and price (thousands of dollars) 10 8 6 4 2 0 44 D 20 30 40 50 60 Students (thousands per year)