University A sets tuition at the equilibrium level based on price and then imposes entrance requirements in the form of minimum high school GPA and SAT scores.Enrollment at this school will likely be
A) at the equilibrium level.
B) below the equilibrium level because of the use of non-price rationing devices.
C) above the equilibrium level because of the combination of price and the use of non-price rationing devices.
D) none of the above

Question

Quizplus · Accepted Answer

By imposing entrance requirements, University A is using a non-price rationing device to limit admissions. This will result in enrollment being below the equilibrium level, since there will be some students who are willing to pay the equilibrium tuition but do not meet the GPA and SAT requirements.

University a Sets Tuition at the Equilibrium Level Based on Price