The incentive of schools to provide a high quality education at a low cost and the incentive of parents and students to shop around for the best schools will be weakest when education is produced
A) privately but paid for by taxpayers and provided free of charge.
B) by public schools and the cost of education is covered by taxes.
C) privately and parents must purchase it with their own money.
D) by public schools and parents purchase it with their own money.

Question

Quizplus · Accepted Answer

When education is produced by public schools and the cost of education is covered by taxes, schools do not have a direct financial incentive to provide high quality education at a low cost because they are not directly competing with other schools for customers. Similarly, parents and students do not have a direct financial incentive to shop around for the best schools because they are already paying for education through their taxes. Therefore, the weakest incentives for high quality education at a low cost occur when education is produced by public schools and the cost is covered by taxes.

The Incentive of Schools to Provide a High Quality Education