A number of states have enacted tuition guarantees for entering freshmen. These guarantees fix tuition for four

Question:

A number of states have enacted tuition guarantees for entering freshmen. These guarantees fix tuition for four years. Suppose that the input costs to providing a college degree increase.

a) Using the supply-and-demand model, show how the increase in input prices affect the market for college degrees.

b) Given this change, predict what the outcome of the tuition-fixing policy will be.

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