A Small Private University Normally Charges the Same Price-$200-Per Credit-Hour

question 80

Essay

A small private university normally charges the same price-$200-per credit-hour for all courses and for all students. While the university is pretty near capacity in the fall and spring, it finds that its classrooms are only about 60% occupied during the summer session. A student of operations management (who has recently read this chapter) wonders if yield management might be useful to both the university and its students alike. This student, with help from some economics majors, estimates a demand curve for summer course enrollment. Points on this demand curve include 9000 credit-hours at the current rate of $200, 12,000 credit hours at $180, 15,000 credit-hours at $160, and 18,000 credit-hours at $140. Based on this demand curve, what price point would best serve the university, if its objective is the greatest revenue for the summer session?

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Definitions:

Minimum Wage

The lowest legal wage that can be paid to most workers.

Unskilled Workers

Laborers who have limited or no special skills or training, often employed in relatively simple tasks.

Difficult Time

A period characterized by challenges, adversities, or hardships that individuals, groups, or entities face.

Quantity Controls

Government-imposed limits on the amount of a good that can be produced or sold in a market.