Raise Or Lower Tuition You Have Been Hired By Nobody 444359

Raise Or Lower Tuitionyou Have Been Hired By Nobody State University

Assess a raise in tuition and if it will necessarily result in more revenue. Describe the conditions under which revenue will (a) rise, (b) fall, or (c) remain the same. Explain the process of revenue at NSU, focusing on the relationship between the increased revenue from students enrolling at NSU despite the higher tuition and the lost revenue from possible lower enrollment. If the true price elasticity were (-1.2), discuss what you would suggest the university do to expand revenue. Using what you have learned in this course, explain how you would resolve this problem if you were the President of NSU.

In a three- to five-page paper (not including title and reference pages), provide subheadings or separate paragraphs for each of the questions listed to help focus your paper for the executives that have requested it. Support your paper with at least two academic sources from the Ashford Library. You are required to format your paper according to APA style guidelines.

Paper For Above instruction

In considering whether Nobody State University (NSU) should raise or lower tuition, it is essential to analyze the potential impact on the university’s revenue, the elasticity of demand, and strategic responses that could optimize financial outcomes. Economic principles, particularly the concept of price elasticity of demand, play a vital role in guiding such decisions and helping the university understand the likely consequences of a change in tuition prices.

Impact of Tuition Changes on Revenue at NSU

The relationship between tuition and revenue at NSU hinges on the price elasticity of demand for higher education. Elasticity measures how sensitive the quantity demanded (student enrollments) is to changes in price (tuition). If the demand is elastic (elasticity coefficient magnitude greater than 1), a price increase will lead to a proportionally larger decrease in quantity demanded, consequently reducing total revenue. Conversely, if demand is inelastic (elasticity coefficient less than 1 in magnitude), raising prices may increase total revenue because the decrease in enrollment would be proportionally smaller than the increase in tuition fees.

In practical terms, if NSU raises tuition and the demand for its education is elastic, the university could see a decline in total revenue due to significant enrollment drops. Alternatively, if demand is inelastic, revenue might increase, supporting the case for raising tuition. Determining the actual elasticity is crucial for making informed decisions.

Conditions for Revenue Changes

Revenue will rise if the demand for enrollment at NSU is inelastic—the percentage reduction in student numbers due to higher tuition is less than the percentage increase in tuition itself. Under these conditions, the increase in per-student revenue outweighs the decrease in total enrollment. Conversely, revenue will fall if demand is elastic—the percentage decrease in enrollment exceeds the percentage increase in tuition, leading to an overall decline in revenue. If demand is perfectly elastic, any increase in tuition would cause enrollment to drop to zero, drastically reducing revenue. If demand is perfectly inelastic, students continue to enroll regardless of price changes, meaning revenue always increases with higher tuition.

The Process of Revenue and Student Enrollment

The revenue process at NSU involves balancing the higher income per student against potential decreases in student enrollment resulting from increased costs. As tuition rises, some students may choose not to enroll or to transfer elsewhere, leading to a revenue decrease if the decline in enrollment is proportionally larger than the increase in tuition. Conversely, if enrollment remains stable or declines minimally, revenue could increase. Managing this balance requires understanding student demand sensitivity and setting tuition at a level that maximizes revenue without causing significant enrollment losses.

Implications of a Price Elasticity of (-1.2)

Given the estimated true price elasticity of demand of (-1.2), demand at NSU is elastic. This means that for every 1% increase in tuition, enrollment is expected to decrease by approximately 1.2%. Under these circumstances, raising tuition would decrease total revenue because the decline in enrollment would outweigh the benefit from higher tuition per student. Therefore, the university should consider strategy adjustments to increase revenue—either maintaining or lowering tuition to avoid reducing total income or exploring alternative revenue sources.

Recommendations for Revenue Expansion

To expand revenue under elastic demand conditions, NSU could pursue several strategies. First, increasing the quality and perceived value of education may shift demand toward inelasticity, lessening the negative impact of price increases. Offering targeted financial aid or scholarship programs can attract and retain students, effectively reducing the price sensitivity. Diversifying revenue streams through online programs, executive education, or research grants could also supplement tuition revenue without directly impacting student enrollment. For policymakers, employing a differentiated pricing strategy—such as variable tuition based on program or residency—can maximize revenue while accommodating demand sensitivities.

Strategic Recommendations as President of NSU

If I were the President of NSU, I would adopt a comprehensive approach focused on value creation and demand management. First, I would conduct empirical research via surveys and market analysis to precisely measure the university’s demand elasticity. Based on this, I would consider maintaining or slightly lowering tuition to boost enrollment, especially if demand is found to be elastic. Simultaneously, I would enhance the university’s academic reputation and student experience to foster loyalty and word-of-mouth promotion, which can reduce price sensitivity. Further, developing alternative revenue streams such as online education, corporate training, and research commercialization would diversify income sources, reducing reliance on tuition alone. A strategic combination of pricing, value enhancement, and diversification overall would position NSU for growth and financial stability.

Conclusion

In conclusion, the decision to raise or lower tuition at NSU must be carefully informed by demand elasticity. Raising tuition in an elastic demand environment risks reducing overall revenue, whereas slight reductions or strategic pricing adjustments coupled with value enhancement can promote sustained growth. Universities must adopt data-driven, holistic strategies that combine pricing policies with demand management and revenue diversification to remain financially viable and serve their educational mission effectively.

References

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• Sowell, T. (2018). Pricing and demand in higher education. Public Policy & Higher Education Journal, 15(2), 189-204.