Question

When universities charge students less than the equilibrium tuition for admission, do they have to impose some nonprice-rationing device?

1) True
2) False

Answer 1

When universities charge students less than the equilibrium tuition for admission, they may need to impose nonprice-rationing devices in certain circumstances.

Step-by-step explanation:

When universities charge students less than the equilibrium tuition for admission, they do not necessarily have to impose a nonprice-rationing device. In some cases, universities may be able to offer lower tuition without implementing any form of rationing, especially if they have alternative sources of funding such as endowments or government subsidies. However, if the university cannot afford to cover the full cost of education for each student, they may need to use nonprice-rationing devices such as limited spaces, selective admissions, or academic requirements to determine which students are accepted.