The Grand Finale

It was easy and natural for colleges to move to price discrimination. The means are simple: Set the price of tuition and room and board at a level higher than their actual costs and then provide monetary aid to students whose parents cannot afford to pay the inflated prices. How much higher should the prices be set? However much higher is required so that discounts can be provided to as many students as the college feels will achieve an optimal mix between high and low income students. However, Price discrimination is not confined to college educations. Indeed, it is linked closely with our federal government and has become more and more common in recent decades. 

First degree price discrimination occurs when normal markets are interfered with and producers are allowed to learn exactly what each consumer is willing and able to pay for the good or service. Using this data, all the producers set individual prices for each consumer, eliminating competition and forcing the consumers that are willing and able to pay a higher price to pay it. In

this pricing scheme, those who are willing and able to pay only a lower price get a break.

So I am going to have to answer this with that I think my Big decision is a free market
in an economic system in which prices are determined by unrestricted
competition between privately owned businesses. Today, in higher education we
are losing this system due to high government involvement. The Department of
Education spends about $30 billion a year on subsidies for higher education
where most of the funding goes towards student aid programs. This is the
problem. With the rise of student subsidies is inflation in tuition and other
college cots. Consumers are pressured to pay the rising costs for higher
education to give them a better future and potential job. The government
subsidies help support the rising costs as well as low income families.
However, colleges and universities take the initiative to set tuition higher to
capture those funds. By lowering government subsidies towards student aid
programs, it would force colleges and universities to lower their tuition and
help create competition which would lead to better information on higher
education schools.

Knowledge

     The concept of knowledge has to be acquired. The process of buying higher education involves multiple steps and decisions which makes it a unique product. Students at community colleges and universities depending on their academic credentials may not be granted the privilege of purchasing the product. 

     Discounts may be offered depending on the financial needs and merits based on the students. Federal and State loans are offered at higher interest loans and can make it difficult for someone studying higher education to measure the appropriate the price. 

     These factors make estimation of the demand elasticities for colleges difficult. The only substitute for higher education is not going to college. The probablitity of attending a higher education school is affected by prices, family income, students academics, and other variables. 

     With the award of financial aid packaging on enrollment probability, there is a $1000 increase in grants and raises the probability by about 11% and an extra $1000 in loans increases it by about 7%. For full paying students, there was found to be an own-price elasticity of -0.76. For financial aid students, BPR has a larger own-price elasticities of -1.18

% changeinquantity%changeinpricePrice elasticity of demand========3,000–2,800(3,000+2,800)/2 × 1002002,900 × 1006.960–70(60+70)/2 × 100–1065 × 100–15.4    6.9%–15.4%0.45

Well this was my formula example for calculating Tution prices and Students.

Price elasticity of supply​=​% changeinprice% changeinquantity​​

Another formula example that can be implemented for calculating price and quantity of supply.