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 the provision of public education, the government can generate an increase in the quantity of educational services demanded since the price for consumers is lowered. This also means that the per-unit price paid by consumers is pushed below the market clearing price, which encourages more people to consume educational services. At the same time, producers of educational services receive a per-unit price above the market clearing price since the government pays them a subsidy to provide educational services. Therefore, all of the above statements are correct.

By Subsidizing the Provision of Public Education, the Government