By subsidizing the provision of public education, the government
A) generates an increase in the quantity of educational services demanded.
B) pushes the per-unit price that consumers pay for educational services below the market clearing price.
C) pushes the per-unit price that producers of educational services receive above the market clearing price.
D) all of the above.

Question

Quizplus · Accepted Answer

By subsidizing public education, the government increases the quantity demanded by making education more affordable for consumers. This push below the market clearing price would lead to the provision of more educational services than what would be provided if the market was left to itself. However, this also means that producers of educational services receive a per-unit price above the market clearing price, which encourages the supply of more educational services. Therefore, all three options are correct.

By Subsidizing the Provision of Public Education, the Government