A+ Solution Fully Answered 100% Correct
Let s examine the history of LSUS undergraduate enrollment vs its tuition and fees I have the excel data files that
Let’s examine the history of LSUS undergraduate enrollment vs. its tuition and fees.
(I have the excel data files that I am trying to attach, but does not give option to attach)
Go to this link (http://www.lsus.edu/offices-and-services/institutional-effectiveness-and-planning/lsus-data-profile) and look at the PDF “LSUS Data Profiles 2011-2012.” The historical price (undergraduate tuition and fees) data is on pg. 106, and collect two types of quantity data: the historical Fall undergrad headcount on pg. 26, and the historical total (not Fall) student credit hour production on pg. 53. You will have headcount and tuition data from 1980-2011, but credit hour production data only from 1985-2011.
Calculate annual elasticities for both types of quantity variables (i.e., you will have an elasticity of price vs. headcount, and one of price vs. credit hour. The first headcount elasticity will be calculated based on the 1980 and 1981 values of tuition and headcount and should be about 0.449; the first credit hour elasticity will be based on the 1985 and 1986 values and should be about -0.295). You will get an error message in your calculations a few times when the tuition doesn’t change, since the elasticity calculation will be trying to divide by zero. Just delete those in your Excel table.
Calculate the average elasticity (over all the years’ values) for headcount, and the average elasticity for credit hour.
The headcount elasticity between the years 2010-2011 is approximately equal to
Q2 The average (over all years) headcount elasticity is approximately _______. This is unexpected because ________.
a. 0.07; it suggests a positive relationship between price and quantity demanded, contrary to the law of demand.
b. 0.216; the value should be negative since headcount and credit hours are substitutes.
c. 0.07; it should be zero since there were a few years between which tuition was unchanged.
d. 0.022; the value of the elasticity should be greater than +1.00, indicated elastic demand rather than inelastic.
Q3 The average (over all years) credit hour elasticity is approximately _______.
a. -0.251; this is also unexpected since tuition always increased and so the elasticity value should be positive.
b. -2.35; this is unexpected since the value is too large. Demand should be considered inelastic and thus the value should be between 0 and -1.0.
c. 0.0279; this is unexpected since the relationship between tuition and credit hours should be negative according to the law of demand.
d. -0.251; this better demonstrates the law of demand since tuition is per credit hour, so credit hour is a more appropriate quantity variable to use than headcount.
Q4 The average credit hour elasticity should be negative and between 0 and -1.0. Many administrators argue that, to increase revenue to LSUS to cover budget shortfalls, tuition should be raised. The credit hour elasticity estimate suggests that
a. raising fees would be detrimental to LSUS’ budget, since the law of demand says that fewer credit hours will be pursued as a result. Fewer credit hours would mean less revenue for LSUS.
b. raising tuition will increase credit hours, since the elasticity is unexpectedly negative.
c. increasing fees may reduce credit hours, but not by much since credit hour demand is apparently inelastic. Raising fees hypothetically would increase LSUS revenue.
d. tuition should only be decreased, since the elasticity value is negative. Raising tuition will only decrease the amount of revenue LSUS enjoys.