Assignment 01.10

Assignment 01.10 - The quantity demanded is greater than...

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Assignment 01.10 Government Impact on Supply and Demand 1a. This is a price floor because the supply is greater than demand. The quantity supplied is greater than the quantity demanded because the high price starts to drive students away. Also it is harder for a college to run on lower tuition. There are also 20,000 spots extra for the college, thus creating a surplus. b. Inefficiencies that could rise are high quality and illegal actions. With less people applying and higher tuition; class would be smaller and colleges have more money to improve quality. But, some might take illegal actions like faking their income for financial aid, hack their way into the system, etc. Wasted resources also occur since 20,000 extra spots are wasted and extra money is thrown in. 2a.
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This acts as a price ceiling because the demand is greater than the supply.
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Unformatted text preview: The quantity demanded is greater than the quantity supplied by 30,000, meaning 30,000 students won’ t get into college. This is a shortage. b. There will be low quality because of low tuition, leaving less money for the college. Inefficient Allocation will occur since low price will attract many people and black market since low tuition forces colleges to make ends meet (bribe for more money to get a spot). Students also waste time and effort to get into college, wasted resources. c. Students will be better off because tuition will return to an equilibrium and they also have grants from the government. State colleges will also be better off because the demand will return to normal and will have enough money, and their resources won’t be wasted....
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This note was uploaded on 09/24/2011 for the course ECON 32342 taught by Professor Macst during the Spring '11 term at Delaware Tech.

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Assignment 01.10 - The quantity demanded is greater than...

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