The Economics of Public Issues-College Costs Outline

The Economics of Public Issues-College Costs Outline -...

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College Costs Over the past three decades the cost of college education has tripled, not because the education has bettered but because the value of education has risen. There are so many colleges and universities in the US that it is a monopolistic competition where the education offered is similar but set apart by advertising and product differentiation. What makes colleges and universities not a good model for monopolistic competition is that they are non profit, but there are other factors that cause prices of tuition to go up. Competition causes colleges to want to hire the best professors…but first they need to have top of the line technology, etc. Competition also causes colleges to want the best students therefore they
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Unformatted text preview: implement price differentiation. • Students with high SAT scores get higher scholarships, have to pay less, therefore are more attracted to go to the school. • Regular students suffer as a result because tuition goes up and their scholarships don’t. • Some states have lotteries that provide for educational scholarships that are kept up (or not) by students grades. • As students stay in one school their elasticity of demand decreases because even if they lose scholarship money they’re still likely to stay in the same school. • Students who lose scholarships give up that money to new students while tuition keeps going...
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This note was uploaded on 04/24/2008 for the course ECN 102 taught by Professor Seely during the Spring '08 term at Wilkes.

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