Use the following figure to answer the questions : Figure : 5-5 shows a family's preferences toward schooling,before and after a fixed-quantity subsidy.

-Prior to the subsidy,the family is in equilibrium at point J.Assume that public schooling cannot be supplemented with private tutoring.Refer to Figure 5-5.Public schooling provided in the amount of B0 causes the family to consume _____ of other goods.
A)MC
B)MH
C)M0
D)CH

Question

Use the following figure to answer the questions : Figure : 5-5 shows a family's preferences toward schooling,before and after a fixed-quantity subsidy.

-Prior to the subsidy,the family is in equilibrium at point J.Assume that public schooling cannot be supplemented with private tutoring.Refer to Figure 5-5.Public schooling provided in the amount of B0 causes the family to consume _____ of other goods. 
A)MC 
B)MH 
C)M0 
D)CH

Quizplus · Accepted Answer

When public schooling is provided in the amount of B0, the family's budget constraint shifts outward, allowing them to consume at a new equilibrium point where the provision of public schooling intersects with their original indifference curve. This point lies on the vertical line corresponding to M0, indicating the amount of other goods they can consume with the subsidy in place.

Use the Following Figure to Answer the Questions : Figure