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Free college has become a popular policy proposal in the US. The intention of advocates of free college policies is to make it easier for
Free college has become a popular policy proposal in the US. The intention of advocates of free college policies is to make it easier for more people to attend college with minimal student debt. This goal could be achieved through two different means: (1) price control on college tuition or (2) a tuition subsidy. Answer the following questions about the two interventions. Be sure to completely answer each question. Be sure to label each graph, curve, axis, relevant point, and area in the model. 1. Using the supply and demand model, illustrate the effect of using a price control to make college $0 for students. I_s this price control a price ceiling or price oor? Explain your graph. (30 points) 2. What is one intended consequences of the price control on college tuition? What is one possible unintended consequences of the price control? (10 points) 3. Using the supply and demand model, illustrate the effect of using a tuition subsidy to make college $0 for students. Explain your graph. (Hint: Be sure to label consumer surplus, producer surplus, tax revenue, deadweight less, price paid by buyers, price paid by sellers, quantity bought & sold after the subsidy, and the subsidy wedge). (40 points) 4. What is one intended consequences of the tuition subsidy? What is one possible unintended consequence of the subsidy? (10 points) 5. Do you think either policy achieves the goals of those advocating for $0 college tuition for all students? If so, at what cost? If not, why? (10 points)
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