State subsidies to public colleges increase demand for public institutions due to lower costs, impacting private colleges as some students may shift preference.
Impact on Public and Private Colleges with Increase in State Subsidies:
When state subsidies to public colleges increase, it reduces the tuition fees at public institutions, making them more affordable. As a result, the demand for public colleges will shift to the right, indicating an increase in students choosing public institutions due to lower costs.
This surge in demand for public colleges can lead to a decrease in demand for private colleges since students may opt for the more affordable public options.
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