(Figure: Market for Child Care) Refer to the market for child care that is shown in the figure. The original equilibrium price is $10,000. A subsidy is now introduced for parents who pay for child care. After the subsidy is implemented, the amount that sellers receive is:
A)$9,000.
B)$2,000.
C)$1,000.
D)$11,000.

Question

(Figure: Market for Child Care) Refer to the market for child care that is shown in the figure. The original equilibrium price is $10,000. A subsidy is now introduced for parents who pay for child care. After the subsidy is implemented, the amount that sellers receive is: 
A)$9,000. 
B)$2,000. 
C)$1,000. 
D)$11,000.

Quizplus · Accepted Answer

A subsidy for parents paying for child care will shift the demand curve to the right. As a result, the equilibrium price will increase from $10,000 to a price higher than $10,000. Therefore, the correct answer is D) $11,000, which represents the new equilibrium price received by sellers after the subsidy is introduced.

(Figure: Market for Child Care) Refer to the Market for Child