Tuition Fee Case Study

1.

A raise of tuition fee does not necessarily guarantee an increase in revenue. Price is by far the most important determinant of demand. Other factors affecting demand are referred to as conditions of demand. Price changes result to a change in quantity demanded. An increase in tuition fee is likely to result to a decrease in demand for university education more so among potential students who are yet to enroll. The resulting outcome will be a decrease in revenue since the number of students enrolling for university education in the institution will reduce. There exists an inverse relationship between tuition fee (price) and the quantity of students enrolling for university education (quantity). It follows that since revenue is a product

It, therefore, follows that any attempt by the university to increase tuition fee would result to a greater decline in the proportion of university education demanded leading to the loss of revenue. The university should consider reducing the tuition fee in order to maximize revenue. The underlying reason is that since the demand is elastic, a small reduction in prices would result to a more than proportionate increase in the quantity of university education demanded. Consequently, there will be an increase in the total amount of revenue generated by the university following the reduction.

5.

To guarantee the increased revenue for the university, I will put emphasis on proper pricing of the tuition fee since price is one of the key determinants of demand. Determining the appropriate price elasticity of demand for university education is of the essence. The elasticity of demand will determine how an increase in tuition fee would impact on the quantity of university education demanded. At a price elasticity of 1.2, the demand for university education is elastic. As a result, I will reduce the tuition fee in order to attract students to enroll in the university. This ought to be the case since a small reduction in tuition fee results to a more than proportionate increase in enrollment for university education in the institution. Since revenue is a function of price and quantity demanded, undertaking a reduction in tuition fee would spur revenues for the