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Business Economics Report Abuse

Category : Others | This query is : open

author : Jaya

Posted On
20 August 2016

Can someone help me with a response on the below
The Board of Trustees of a leading State University is faced with a critical financial problem. At present tuition rates, the University is losing $ 7.5 million per year. The President of the University urges that tuition rate may be raised by $750 over the present $3000 rate - a 25% increase. Based on the current strength of 10000 students now attending the school, he projects that this increase would cover the $7.5 million shortfall in revenues. Student leaders protest that they cannot afford a hike tuition rate. The president responds that the only alternative is cut back significantly on programs and faculty. The students quickly realize that any appeal that involves compassion for their plight is likely to fall on deaf ears. Their only hope is to demonstrate that the tuition hike is not in the best interest of the University.
(A journal articles reveals that the elasticity for enrollment at state university is – 1.3 with respect to the tuition charges)
If the tuition fee is hiked as contemplated, what will be its impact on revenue? Given the situation is it advisable to increase the tuition fees to cover the revenue short fall? Give reasons. If you are the students’ leader, how will you convince the management that the fee like is not the best course of action to increase the revenue?




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