Use the following figure to answer the questions : Figure : 5-5 shows a family's preferences toward schooling,before and after a fixed-quantity subsidy.

-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.The fixed-quantity subsidy reduces schooling by _____.
A)G0
B)B0
C)BG
D)H0

Question

Use the following figure to answer the questions : Figure : 5-5 shows a family's preferences toward schooling,before and after a fixed-quantity subsidy.

-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.The fixed-quantity subsidy reduces schooling by _____. 
A)G0 
B)B0 
C)BG 
D)H0

Quizplus · Accepted Answer

A fixed-quantity subsidy, assuming it leads to a situation where the quantity of schooling is fixed at a level supported by the subsidy, would reduce the flexibility of families to choose the amount of schooling. This would effectively create a situation where the quantity of schooling could be less than what the family would choose in an unsubsidized market, moving from a higher level of schooling to a lower, subsidized level. The correct answer depends on understanding how subsidies can alter market equilibria and consumer choices, specifically in the context of the question's details about public schooling and the prohibition on private tutoring supplementation.

Use the Following Figure to Answer the Questions : Figure