Question

The government offers numerous educational subsidies through grants and low-cost equipment to schools. They also provide a lot of incentives to go to school. Because of this, we expect that the equilibrium price of education will ________ and the equilibrium quantity of students will ________.

Answer 1

Answer:

Indeterminate; Increases

Explanation:

Here, we are talking about the education. If the government provide various schemes and subsidies for the children to go to school then as a result both demand and supply of education will increases.

Increase in demand will shift the demand curve of education rightwards and Increase in supply will shift the supply curve of education rightwards.

This shift will lead to increase the equilibrium quantity of the students but the effect on equilibrium price of education is ambiguous because its effect will be depend upon the magnitude of the shifts of the demand and supply curve.