When state and local governments provide public schools with a per-unit subsidy to provide educational services, the price that the schools providing these services receive is
A) less than the price that consumers pay to receive educational services.
B) less than the amount of the per-unit subsidy that the schools receive.
C) greater than the market clearing price without the subsidy.
D) equal to zero.

Question

Quizplus · Accepted Answer

The per-unit subsidy increases the price that schools receive for providing educational services above the market clearing price, as it effectively lowers their cost of providing these services or offers additional revenue per unit of service provided, encouraging them to supply more at a given price point.

When State and Local Governments Provide Public Schools with a Per-Unit