Yes Bert, the less spots and the more students does mean the school can be more selective. Another way of saying that is that the demand for the school is high, but the supply is low. Therefore the power is in the hands of the school. They can select who they want and charge what they want. The students are just trying to get in a school at any cost.
Now flip it. If there are more slots than students, then the supply of slots is higher (or equal to) the demand for them. This would allow students to be more selective in where they applied if they wished and schools would have to compete against each other to attract those students. That would show up as either price savings or better facilities/faculty/etc.
more clear?
BTW, the website above does not really exist as far as I know. I just made it up. lol
