By subsidizing the provision of public education, the government

A. pushes the per-unit price that producers of educational services receive above the market clearing price.
B. pushes the per-unit price that consumers pay for educational services below the market clearing price.
C. generates an increase in the quantity of educational services demanded.
D. All of these.


Answer: D

Economics

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You work as a forecaster for a luxury automobile manufacturer. You know that there is a strong positive relationship between the demand for luxury automobiles and income levels. The government issues a report predicting that it expects income levels to increase steadily over the next 5 years. All else equal, which of the following courses of action would you recommend to the firm?

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