In the country of Bandalong, getting a university education improves a person’s earnings. In addition, it benefits the entire economy as growth rates increase. The market for university education is perfectly competitive. For this entire question, for simplicity, you can assume an upward sloping Market Supply curve for a university education (i.e. we are always in the short run). The price of university tuition is determined in the market. To keep its campaign promise of making university education more affordable, the government introduced a new program where a every university student gets a $5000 per year subsidy.
The opposition claims that the education subsidy is too high right now and is actually reducing societal well-being (or surplus). Agree, Disagree or It Depends? Explain your reasoning. A diagram by itself is not enough, you must explain your reasoning.

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Agree The governments education subsidy of 5000 per year is too high right now and is actually reducing societal wellbeing or surplus This is because ... View the full answer