Question

After WWII, returning veterans paid a lower price for college tuition than did civilians.

If instead, returning veterans pay the same tuition as civilians, then the price of professional services ________, the quantity of professional services ________, consumer surplus_______, and the producer surplus__________.

A) rises; increases; increases; increases;
B) rises; increases; decreases; increases;
C) falls; decreases; decreases; decreases;
D) falls; increases; decreases; increases;
E) rises; decreases; decreases; decreases;

Answer 1

E) rises; decreases; decreases; decreases;

Step-by-step explanation:

As the veterans will pay a higher price, then the entire market price of the professional service will rise. A rise in the price will lead to a fall in the quantity of professional services, and as a result, having a higher equilibrium point, a higher market price with lower quantity, both surpluses, the one of the consumer and the producer's will decrease.