a.

Seeing that the private sector serves over 95% of the total market for college education, this is an industry that is highly privatized (i.e. laissez-faire economics).

• However, given that there are 500 schools offering more or less the same services to students (i.e. an education), this is a competitive market as there are many suppliers with little or no differentiating factors between them.

b.

The government can be concerned about the the very high costs for a college education if the schools are colluding in some way to keep prices high in order to ensure a strong return on investment. However, this is unlikely given that, with over 500 schools, it is likely that these firms are price takers and thus the market is behaving in a way where, if the price point can be lowered by firms in order to gain more market share, they would do so.