Over The Last 30 Years In The US: The Real Price Of A Colleg
Over The Last 30 Year In The Us The Real Price Of A College Education
Over the last 30 year in the US, the real price of a college education (i.e. after adjusting for inflation) has increased by almost 70 percent. Over the same period, an increasing number of high school graduates have sought a college education. (Nationwide college enrollments almost doubled over this period.) While faculty salaries have barely kept pace with inflation, administrative staffing (and expenditures) and capital costs have increased significantly. In addition, government support to universities (particularly research funding) has been cut. a. College enrollments increased at the same time that average tuition rose dramatically. Does this contradict the law of downward-sloping demand? Explain briefly. b. Use supply and demand curves (or shifts therein) to explain the dramatic rise in the price of a college education. Complete this essay in a Microsoft Word document, with a minimum of 300 words, APA formatted, 2 REFERENCES
Paper For Above instruction
The simultaneous increase in college enrollments and tuition prices over the past three decades presents an intriguing paradox that initially appears to challenge the fundamental economic principle of downward-sloping demand. According to classical demand theory, as the price of a good or service increases, the quantity demanded should decrease. However, in the context of higher education in the United States, this expectation does not seem to hold, which can be explained through the lens of supply and demand dynamics and alternative factors influencing consumer behavior.
Firstly, it's essential to recognize that the demand curve for college education has not shifted uniformly. While some prospective students may be deterred by rising costs, the perceived value and long-term benefits of a college degree have remained compelling. A college diploma is often viewed as a pathway to higher earning potential, job stability, and socioeconomic mobility, which sustains demand even as prices escalate. The concept of "demand elasticity" in this scenario is relatively inelastic because the opportunity cost of not attending college—such as lower lifetime earnings—remains significant, compelling students to enroll despite higher tuition fees.
Furthermore, the dramatic rise in the price of college education can be attributed to shifts in the supply side of the market. Over the last 30 years, several factors have contributed to the constriction and cost increase of supply. University expenditures on administration, capital improvements, and amenities have surged, attributable partly to increased competition among institutions to attract students and provide broader services. Meanwhile, government funding—particularly in research—has declined, forcing universities to rely more heavily on tuition revenues to cover costs. This reduced external support has led institutions to raise tuition, effectively shifting the supply curve inward (leftward), which in turn, raises the equilibrium price.
Simultaneously, demand has shifted rightward due to demographic trends such as population growth of high school graduates, increased awareness of higher education benefits, and expanding access strategies. These shifts in both supply and demand curves have resulted in a significant price increase despite rising enrollments. This situation illustrates how complex market forces can lead to a paradoxical scenario where higher prices and higher demand coexist—highlighting the importance of understanding supply and demand interactions in the education sector.
References
- Bettinger, E. P., & Loeb, S. (2017). Promoting college access and success: State policy and practice. The Future of Children, 27(1), 97-119. https://doi.org/10.1353/foc.2017.0004
- Deming, D. J., & Walters, C. R. (2017). The Impact of Price Discrimination on College Enrollment. American Economic Review, 107(8), 2353-87. https://doi.org/10.1257/aer.20151072