ECO 204 Week 2 Assignment NSU Tuition
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ECO 204 Week 2 Assignment NSU Tuition
Nobody State University (NSU): Raise or Lower Tuition?
Assess a raise in tuition and if it will necessarily result in more revenue.
The first question we need to ask is why NSU is wanting or needing to raise or lower tuition fees. Are they losing funding? Is enrollment down? Are the facilities well maintained? Are the staff teaching at the level expected of them? Malcolm & McMinn (2013) write “The start of a new school year is punctuated by what’s become a new financial norm for public universities: massive cuts in state funding that lead to rising tuition, cuts in enrollment, sporadic class schedules and staff layoffs (para 1).” When assessing a possible raise in NSU’s tuition fees, we need to look at how the price elasticity of demand will affect the overall total revenue of the university while taking into account all the items mentioned above. Then they would need to determine which of the three categories they would fit into: elastic, inelastic, or unitary. Price elasticity of demand is defined as the measure of the responsiveness of the quantity demanded to changes in price. If goods/services are elastic then the quantity demanded changes by a larger percentage than the price changes affecting said goods/services. If said goods/services are inelastic then the quantity demanded changes by a smaller percentage than the price changes affecting said goods/services. If the same goods/services are unitary then the quantity demanded changes by the same percentage as the price changes of the goods/services.(Summarized from Amacher & Pate, 2013, chap 4.3 & chap 4 summary)
Conditions under which revenue will (a) rise, (b)...