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Explain Whether If Nobody State University Increases Its Tuition, Will This Necessarily Result In More Revenue

835 Words4 Pages

Introduction This paper will investigate the question if Nobody State University increases its tuition, will this necessarily result in more revenue? This paper will also detail the condition under which the university’s revenue could rise, fall or remain the same. I will explain the process focusing on the relationship between the increase revenue from students enrolling at NSU despite the higher tuition and the lost revenue from possible lower enrollment. I will also discuss if the true elasticity were -1.2 would I suggest the university do to expand revenue. Also, if I was the president of NSU, how would I tackle this problem based on what I have learned in this course?
Revenue and Increase in Tuition
“If a small change in price is accompanied by a large change in quantity demanded, the product is said to be elastic (or responsive to price changes). Conversely, a product is inelastic if a large change in price is accompanied by a small amount of change in quantity demanded”, (investopedia.com). Elasticity of demand measures the responsiveness of demand to a change in price. Inelastic demand means a change in price causes a smaller percentage change in demand. …show more content…

Therefore, an increase in revenue will result if that demand is elastic. NSU is not looking to reduce its tuition; however, reduction in tuition could result in increased enrollment which could result in higher revenue. Whereas raising tuition could result in the students transferring to another university where tuition is less expensive. Therefore, if tuition or enrollment increases, revenue would increase for

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