Unit 4- Elasticity Revenue

The article I chose for this exercise is about the increase in tuition fees for universities in the UK. Click here to read the article on the BBC news website.
The information that is given in the article shows an increase in tuition fees from £3,350 to £9,000. As at January 15 there were 462,507 applicants for September up from 508,295. When looking at one country in particular to get a better idea of the effect that this is having, England alone had a decrease in applicants by 9.9%. (In order to plot the data I used an article published by The Guardian, found here, to show the original university fee of £3,350.)

Below you will find a graph plotting the tuition fees and number of applicants (I have used a combination of values found in my articles as well as values I added to help plot my points). The last values (£500, 200, 1.615385) were not included in the graph but were added to demonstrate the elasticity if the tuition fees dropped even lower and the number of applicants increase dramatically.



(Quantity is valued in thousands)

TR at 9,000 & 462,507= 4.2 million
TR at 3,350 & 508,295= 1.7 million

The maximum revenue is at approximately 400 applicants with the total revenue being approximately 5.2 million. Applicants increase when the price decreases but total revenue also decreases when the price decreases. Universities need to set their tuitions fees at a price that will still encourage applicants and will continue earning them a profit.