A family's preferences toward schooling,before and after a fixed-quantity subsidy,are shown in Figure 5-5.Prior to the subsidy,the family is in equilibrium at point J.Assume that public schooling cannot be supplemented with private tutoring.
-Refer to Figure 5-5.After the fixed-quantity subsidy has been introduced,the family consumes:
A)its optimum level of other goods.
B)less than its optimum quantity of schooling.
C)more than its optimum quantity of schooling.
D)less than its optimum quantity of other goods.

Question

A family's preferences toward schooling,before and after a fixed-quantity subsidy,are shown in Figure 5-5.Prior to the subsidy,the family is in equilibrium at point J.Assume that public schooling cannot be supplemented with private tutoring. 
-Refer to Figure 5-5.After the fixed-quantity subsidy has been introduced,the family consumes:
A)its optimum level of other goods. 
B)less than its optimum quantity of schooling. 
C)more than its optimum quantity of schooling. 
D)less than its optimum quantity of other goods.

Quizplus · Accepted Answer

A fixed-quantity subsidy for schooling means the family receives a set amount of schooling regardless of their choice. This can lead to consuming less than the optimum quantity of schooling if the subsidy does not align with their preferences or needs.

A Family's Preferences Toward Schooling,before and After a Fixed-Quantity Subsidy,are