Education Price Cap Watch

MiniLFC
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Hey, I have chosen the following essay title below;

Two years ago, the UK government raised the cap on University fees from about £3,000 to £9,000. In general, what are the consequences of an increase in a price cap? In your opinion, are there any special features of the market for higher education? Might these special features imply that the effects of such a policy move may be different from what standard economic analysis would predict?
From my understanding, it looks to me that the essay layout is being given. Initially I should talk about the workings of a price cap. I believe I should draw a diagram over a price cap below the market equilibrium, to show the first £3000 cap, then I should increase this limit slight by drawing another line just above to show the increase to £9000. I then describe the general changes in the market, from price increasing, quantity increase, extension of supply, a contraction in demand and so on.

In the 2nd part of the essay I think I should describe the exclusive features of the University level education market? Such as, a degree is required to gain opportunities in higher skilled work and therefore higher paid work. Thus, there is relatively inelastic demand as due to the current level of youth unemployment, many students are looking towards investing in their education in order to stand out against the competition.

For the 3rd section, I take into account the "special features" I mentioned in the 2nd part of the essay and merge them together with the general model of a price cap and compare the differences?

This final and the section prior are the areas in which I think I am severely lacking.


This is what I have come up with to answer the essay; however I feel like I can write more points and much better points. If anyone could provide some advice on some key points to answering this question then, well, thanks!

Note: The essay is worth around 10% and has a limit of 1000 words, so I know I wouldn’t need to write too much.
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harrismahmood
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A fellow student from the University of Leicester? :P
I would not talk about a contraction in demand, as it only fell by 65 thousand after the first year, and since has risen each year, therefore indicating price insensitivity. Exclusive features include the fact that it's one of the only, if not the only market in the UK, in which payment for the service is 100% subsidised by the government, regardless of income. Due to this, even though the price ceiling was placed above the original market EQ (which in a normal market would make no sense), the price ceiling still had an effect. The last part should be a contrast of a theoretical market which has normal economic parameters applied to it, and the actual market of university fees. I hope this helps, as I've just given you my essay plan :P Good luck! P.s. what a boring lecturer ehy?
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so_nea
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can i just say, you are a life saver for this harris. seriously the lecturer is a boring mofo that;s why i never come in. hope he don't see this
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