Over the last 30 year in the US, the real price of a college education (i.e. aft

Question

Over the last 30 year in the US, the real price of a college education (i.e. after adjusting for inflation) has increased by almost 70 percent. Over the same period, an increasing number of high school graduates have sought a college education. (Nationwide college enrollments almost doubled over this period.) While faculty salaries have barely kept pace with inflation, administrative staffing (and expenditures) and capital costs have increased significantly. In addition, government support to universities (particularly research funding) has been cut. a. College enrollments increased at the same time that average tuition rose dramatically. Does this contradict the law of downward-sloping demand? Explain briefly. b. Use supply and demand curves (or shifts therein) to explain the dramatic rise in the price of a college education.

Explanation / Answer

Hi, If you like my answer rate me lifesaver first...that way only I can earn points. Thanks a) No, this is in accordance with effects of increasing demand. Since demand for college education has increased so tuition fees should rise. This will go on till people find college education too expensive and its demand fall b) the supply has not increased much. (Costs for running college has not increased much.. professor salary etc.) but the demand has. So due to excess increase of demand over supply the price of education has increased

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