Raiseor Lower Tuition @NSU
Raiseor Lower Tuition @NSU
Campusesmust regularly consider tuition costs with regard to offering qualityeducational services. Ascertaining where the pricings are implementedis a critical decision that requires the university presidents andadministrators to assess when making the campus goals. Apart from thetuition fees playing a significant role in student enrollment, itoffers a source of revenue to the institutions. As such, the campusesought to ascertain the impact of lowering or raising the tuition onthe overall earned revenues. This paper will scrutinize this aspectand provide the situations that warrant the alteration in tuitioncosts. Additionally, it will ascertain the situations in which thetuition costs will result in the revenue to fall, rise, or remainconstant. Furthermore, using -1.2 as the theoretical tuitionelasticity figure of demand for education, this paper will give arise in tuition rational to the administration board, and presidentof Nobody State University founded on the campus’s potentialrevenue effect [ CITATION Placeholder9 l 1033 ].
Thetuition price elasticity technique is utilized to gauge thesensitivity of student’s registration decisions on variations ininstitution’s tuitions. Precisely calculating the tuition feeflexibility is crucial to an admin’s decision to alter the rates.Campuses may try to augment the institute’s income via tuitionamount rises nevertheless it will simply be fruitful if the studentregistration is relatively inelastic or insensitive to the ratemodification. On the other hand, if the increase in tuition ratesleads to students becoming elastic, or price sensitive, theinstitution may encounter both overall revenue and enrollmentreduction. As such, it is vital to illustrate situations that inwhich the institution’s income will fall, rise, or remain the same[ CITATION Pan12 l 1033 ].
Theformula used is, Elasticity = % variation in the dependent variables/ % variation in the independent variables. It measures theelasticity of how the dependent variable reacts to the alterations ofthe independent variables. As such, the augment in tuition prices andits effect on total revenue is dependent on the inelastic, unitary,or elastic demand. In an elastic demand situation, the figure isgreater than one and the demands alter fairly more than the price. Onthe other hand, in inelastic situations, the figure is less than one.In such a scenario, the percentage shift of the demanded quantity isless as compared to the changes in the price. In the unitarysituation, the demand coefficient and price is equivalent to one.
Inelasticityof demand and price elasticity and tuition increases. Looking at theaspects of measurement of the extent of receptiveness in the amountdemanded of a product because of the modification of its costs, itcan be shown how elasticity in price demand affects the overallrevenue when the tuition costs were to be raised. As such,considering the flexibility of price demand, the total elasticityvalue is more than one hence, the equivalent waning in the amount ofgoods demanded due to a rise in the tuition costs will be greaterthan the equivalent surge in the tuition price, leading to a drop intotal revenues [CITATION Placeholder9 l 1033 ].
Conversely,looking at the effect of price inelastic of demand on the overallrevenues, it is evident that the total worth of elasticity is muchless than one. Hence, the proportional drop in the amount of productsdemanded, because of the rise in the tuition costs. Nevertheless, thedrop will be less than the proportionate rise in cost, making theoverall revenue increase as a result of the rising tuition price. Inthat case, while utilizing the elasticity of demand, an increase intuition costs will lead to a decrease in the number of students. Thiswould create a loss of the overall income of NSU. When utilizing theinelasticity of demand, a rise in the costs will not have an impacton the market, that is, a number of students. In that case, it willheighten the total income of NSU [ CITATION Mar132 l 1033 ].
Consideringthe unitary demand, when the tuition costs remain the same, the totalrevenue also remains constant. The circumstances which will make theoverall income of NSU to fall, rise, or remain constant as mentionedearlier are elasticity demand. In that case, when the total worth ofthe price elasticity demand is more than one. As such, the rise intuition costs results in the decline of total income. In priceinelastic, the demand is lesser than one thus an increase in tuitioncosts will cause a significant increase in the total revenue. On theother hand, in the unitary market, a rise in education costs has novariances on the total income [CITATION Pan12 l 1033 ].
IfNSU decides to maintain the tuition prices but advocates for studentloans and grants, the number of students will increase. As a result,the total income will be heightened. Similarly, if they decrease thetuition costs, it would allow more students to join, and through thefinancial aids, they would still gain considerable income.Conversely, if they increase the tuition fees, fewer students willattend the institution thus leading to a decline in the overallrevenue. Taking the actual price of elastic demand as -1.2, thismeans demand will be elastic about the tuition costs. In other words,the proportional drop in registration, because of the rise in tuitioncosts will make the overall income at NSU to decline. It isequivalent to stating that a one percent rise in the tuition costswill cause a 1.2 percent decline in enrollment. This means theoverall revenue will decrease by 0.2 percent [ CITATION Placeholder9 l 1033 ].
Amacher, R. P. (2012). Principles of Macroeconomics. San Diego, California: Bridgepoint.
Marcus, J. (2013). Some Colleges Reduce Tuition as Consumers Seek Lower Costs. Community College Week.
Pant, M. (2012). Tribune Business Week, Enrollment rises, so does tuition. Retrieved from http://search.proquest.com.proxy-library.ashford.edu/docview/1016682466/