Assume that the marginal benehts to society of higher education are greater than the marginal private benefits, as shown in the graph below. What type of policy would likely be an efficient way to resolve the externality? Price Marginal Benefit = S=PMC MB Deadweight Loss with Externality Social Margina SMB =PMB + D= PMB Q, Quantity Underconsumption: Q1

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A: Correct option is (1).

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