Welcome to the latest installment in our ongoing series that explores price theory challenges with
-
Professor Bryan Cutsinger
. Discover all of Cutsinger’s problems and solutions by subscribing to
his EconLog RSS feed
. We encourage you to share your thoughts on possible solutions in the comments section. Professor Cutsinger will engage in discussions over the next few weeks, and his proposed solution will be shared shortly after. We wish you success in your analysis, and may the principles of price theory guide you!
Question: Is the following statement true or false? Please provide your justification.
If the supply of higher education services remains unchanged despite increasing prices—indicating a perfectly inelastic supply—then subsidizing the
demand
for such services will primarily benefit the universities and their personnel.
In conclusion, understanding the dynamics of supply and demand in higher education is crucial. This discussion allows for deeper insights into how subsidies can impact different stakeholders within the educational landscape.
