Suppose the University of Oklahoma decides to alter its tuition schedule by separating its students based on how many credit hours they have accumulated. Students with fewer than 15 credit hours get a 13% reduction in tuition while students with 45-90 and more than 90 credit hours face an increase in tuition of 22 and 71%, respectively. Fully explain whether this pricing strategy is rooted in a sound understanding of the price elasticity of demand, or not.

Question

Malone

Social Studies

14 September, 07:52

Suppose the University of Oklahoma decides to alter its tuition schedule by separating its students based on how many credit hours they have accumulated. Students with fewer than 15 credit hours get a 13% reduction in tuition while students with 45-90 and more than 90 credit hours face an increase in tuition of 22 and 71%, respectively. Fully explain whether this pricing strategy is rooted in a sound understanding of the price elasticity of demand, or not.

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Peyton Murray · Answer 1

Well you kind of see that happening right now. Upper division courses are more expensive than lower division and graduate courses are more than undergraduate courses.

You can say that the under 15 course hours are elastic to price change while the more courses you complete the more inelastic the price change.

The lower price so that freshmen can think the price of college is cheap and then rise it as the student progresses because what can a person do without a college degree?