Question

Suppose a university decides to alter its tuition schedule by separating its students based on how many years of college they have completed. Most university programs require four years to complete. First-year students would get a 13% tuition reduction. Second-year students would pay the normal tuition. Third- and fourth-year students face an increase in tuition of 25 and 41%, respectively. Fully explain whether this pricing strategy is based on a sound understanding of price elasticity of demand, or not.

Answer 1

Answer;

yes

Explanation:

Suppose a university decides to alter its tuition schedule by separating its students based on how many years of college they have completed. Most university programs require four years to complete. First-year students would get a 13% tuition reduction. Second-year students would pay the normal tuition. Third- and fourth-year students face an increase intuition of 25 and 41%, respectively. Fully explain whether this pricing strategy is based on as sound understanding of price elasticity of demand, or not. This based on a sound understanding of supply and demand because first-year students have many options of where to go to college. By making their price cheaper for the first year it is more appealing to students and becomes elastic. The second year would be unit elasticity. and in the thirds year and 4th year, the students would need their degree badly so they would not change their college based on their tuition, so they would still pay the tuition to receive their degree, this will make these two years inelastic.

Answer 2

This based on a sound understanding of supply and demand because first-year students have many options of where to go to college. By makingtheir price cheaper for the first year it is more appealing to students andbecomes elastic. The second year would be unit elasticity. and in the thirdyear and 4th year, the students would need their degree badly so they wouldnot change their college based on their tuition, so they would still pay thetuition to receive their degree, this will make these two years inelastic.