An economic model of educational supply and demand was tested using cross-sectional data for the 95 Virginia county school districts. Three equations were hypothesized: (1) the quantity supply functions; (2) the quantity demand function; and (3) the quality demand function. The variables in the equations are education expenditures, percent of 9th grade students graduating in 4 years, 11th grade reading achievement test scores, mean per capita income, percent of adults 25 years old or older with a high school diploma, employment rate, rural or urban district, and percent of non-white population. The model was fitted with data obtained from the 1980-81 report on local government expenditures and from the 1980-81 state department of education publication on schools. The equations were estimated with three stage least squares. The variation explained by the model (weighted R-squared) was .6328. Rank and order condition for identification were met. The results of the study suggest that decisions regarding education services can be meaningfully viewed as a simultaneous consideration of benefits and costs. (JHZ)