Since 2014, Quebec, Canada, has offered a per-child subsidy (which is a negative tax) on day care

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Since 2014, Quebec, Canada, has offered a per-child subsidy (which is a negative tax) on day care for young children that lowers the price to $7 per child. 

a. What is the effect of this subsidy on the equilibrium price and quantity?

b. Show the incidence of the subsidy on day care providers and parents using a supply-anddemand diagram.

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Managerial Economics And Strategy

ISBN: 9780134899701

3rd Edition

Authors: Jeffrey M. Perloff, James A. Brander

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