Microeconomics 6th Edition by Robert Hall, Shirley Kuiper, Marc Lieberman

Exercise 15

Figure 1 shows the impact of a $10,000 subsidy on the market for college education when the subsidy is paid to college students. Starting with the same initial supply and demand curves,show what happens when the same $10,000 subsidy per student is paid to the colleges they attend. Suggestion: Trace the relevant curves from the figure on your own sheet of paper. [Hint: If a subsidy is paid directly to the colleges,which curve will shift? In what direction?]
Figure 1 A Subsidy for Students Attending College