Elasticity studies have looked at the overall demand for higher education in general; some have examined the demand for specific sectors (public, four-year colleges and universities, for example); and some have considered demand at the level of the individual institution. Obviously, we would expect the elasticities to be quite different depending on the level of the analysis

Elasticity studies have looked at the overall demand for higher education in general; some have examined the demand for specific sectors(public, four-year colleges and universities, for example); and some have considered demand at the level of the individual institution. Obviously, we would expect the elasticities to be quite different depending on the level of the analysis.

 

• Would you expect the price elasticity of demand to be higher at the level of an individual school (e.g., Baker) or at the aggregate level (e.g., all 4-year colleges and universities)? Why?
• Despite the empirical evidence to the contrary, college decision-makers often believe that their price elasticity of demand is essentially zero.Is that right? How important were price considerations in making your college decision? Would a change of a few thousand dollars have mattered?
• Would you expect the price elasticity of demand to be higher for financial-aid students or for non-aid students?Why?
• How does a student’s income elasticity affect the demand for higher education at Baker College?