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?

---

Definitions:

Taste Better

A subjective assessment indicating that one item is perceived as more pleasing or enjoyable in flavor than another.

Disjunctive Syllogism

A form of logical reasoning where, from two possibilities, the elimination of one implies the necessity of the other.

Valid Argument

A logical conclusion based on premises that are true and follows a form that guarantees its truth.

Educated Mind

A mind that has acquired knowledge and intellectual skills through learning and study.