The figure below shows the demand and supply curves in the market for elementary education. Figure 13.1
In the figure,
D: Private demand curve for elementary education
D + s: Demand curve which includes public benefits
S: Supply curve of education
Price and Quantity have been taken on vertical and horizontal axes respectively.
In Figure 13.1, D represents the private demand for education, and D+s represents the demand including the public benefits of education.According to the figure, the optimal subsidy is equal to:

Question

The figure below shows the demand and supply curves in the market for elementary education. Figure 13.1
 In the figure,
D: Private demand curve for elementary education
D + s: Demand curve which includes public benefits
S: Supply curve of education
Price and Quantity have been taken on vertical and horizontal axes respectively.
In Figure 13.1, D represents the private demand for education, and D+s represents the demand including the public benefits of education.According to the figure, the optimal subsidy is equal to:

Quizplus · Accepted Answer

The optimal subsidy is the difference between the social cost of producing education and the private cost paid by consumers. It is represented by the vertical distance between the private demand curve (D) and the demand curve including public benefits (D+s) at the quantity where the supply curve (S) intersects with D+s, which is point b in the figure. Therefore, the formula for the optimal subsidy is Q_sb - Q_sd.

The Figure Below Shows the Demand and Supply Curves in the Market