Answer to Question #67778 in Management for Munish Goel

Question #67778
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 be raised $750 over the present $3000 rate- a 25% increase. Based on the 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 tuition hike; the president responds that the only alternative is cut back significantly on programs and faculty. The faculty supports the tuition increase as a means of preserving their jobs. 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)
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