In order to determine how increased tuition fee will in influence NSU's total revenue, one has to determine the elasticity of demand and evaluate whether the increase in tuition fee will result in a decline or an increase in revenue. The decline or increase in NSU's revenue will depend on whether tuition highlights inelastic or elastic demand (Bryan and Whipple, 1995). Elasticity can be referred to as a measure on how a certain variable responds or changes due to the change in another variable. It is usually determined as "the percent change in a variable that is dependent on the corresponding change in the independent variable." Establishing appropriate tuition charges will be an important strategy taken by the management and may serve as …show more content…
The process of purchasing this unique product starts with a number of decisions made by the university management who act as the sellers and the students who serve the role of the buyers. Enrollment of students starts with application process which is weighed on the basis of merit. This implies that another individual may have enough money to purchase the product but may not meet the set merit to pursue any given course offered at NSU. This there implies that when NSU increases its tuition, more revenue will be generated than when tuition is decreased (Bryan and Whipple, 1995). Generally, it has been found that demand for university education is relatively inelastic. This implies that when the tuition charges are increased, the enrollment rate will not be negatively influenced like the way it is for elastic products. Every school has a maximum capacity of students that it can accommodate and therefore, even in a competitive market where there are several universities offering similar courses, an increase in tuition fees will rarely influence the enrollment rate and this means that more revenue will be realized in return (Savoca, …show more content…
Given that the number of enrollment is constant and there is an increase in the fee, then the university will be in a position to raise more revenue which will help it solve its financial challenges. However, there is a limit such that when an extra increase in tuition fee is conducted then the number of enrollment declines and hence decline in the revenue collected. Management of NSU should be more concerned by the elasticity of demand and how the change of variable affects the other