Suppose that the government provides a subsidy for the consumption of higher education. The equilibrium price of higher education will be ___________ with the subsidy than without because the demand curve with the subsidy will lie to the ______________ of the demand curve without the subsidy.
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The equilibrium price of higher education with the subsidy will likely be higher with the subsidy than without because the demand curve with the subsidy will lie to the right of the demand curve without the subsidy. When the government provides a subsidy for the consumption of higher education, it effectively lowers the price paid by the consumers, thus increasing their ability to purchase education. This causes a shift in the demand curve to the right, indicating a higher quantity demanded at any given price level. As a result, the increased demand can push up the market price, depending on the relative elasticities of demand and supply.