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). You will get an error message in your calculations when the tuition doesn't change from 2006-2007 and 2016-2017, since the elasticity calculation will be trying to divide by zero; just delete those error values in your Excel table so that the cells are blank. The first headcount elasticity will be calculated based on the 2004 and 2005 values of tuition and headcount and should be about 0.159; the first credit hour elasticity will also be based on the 2004 and 2005 values and should be about -0.348). Calculate the average annual elasticity for headcount (from 2004-2017), and the average annual elasticity for credit hour (from 2004-2017).
Many administrators argue that, to increase revenue to LSUS to cover budget shortfalls, tuition should be raised. Comment on this suggestion, using the evidence you’ve uncovered.
| Year | undergrad enrollment | total LSUS credit hour production | undergrad tuition and fees |
| 2004 | 3,910 | 101,868 | $1,545 |
| 2005 | 3,940 | 100,181 | $1,621 |
| 2006 | 3,594 | 92,486 | $1,667 |
| 2007 | 3,556 | 92,123 | $1,667 |
| 2008 | 3,903 | 94,639 | $1,751 |
| 2009 | 4,220 | 101,972 | $1,867 |
| 2010 | 4,058 | 98,137 | $2,062 |
| 2011 | 4,134 | 98,372 | $2,247 |
| 2012 | 4,124 | 93,163 | $2,472 |
| 2013 | 3,674 | 85,292 | $2,803 |
| 2014 | 3,202 | 87,907 | $3,084 |
| 2015 | 2,775 | 91,021 | $3,355 |
| 2016 | 2,587 | 94,077 | $3,417 |
| 2017 | 2,637 | 115,340 | $3,417 |
Price Elasticity = Percentage change in Quantity / Percentage change in Price
The table with the calculation is produced below.
| Year | Enrollment | Credit Hours | Fees | % Change tuition | % Enrollment | Price Elasticity | % Credit Hours | Price Elasticity |
| 2004 | 3910 | 101868 | 1545 | Enrollment | Credit Hour | |||
| 2005 | 3940 | 100181 | 1621 | 4.919 | 0.767 | 0.156 | -1.656 | -0.337 |
| 2006 | 3594 | 92486 | 1667 | 2.838 | -8.782 | -3.095 | -7.681 | -2.707 |
| 2007 | 3556 | 92123 | 1667 | 0.000 | -1.057 | -0.392 | ||
| 2008 | 3903 | 94639 | 1751 | 5.039 | 9.758 | 1.937 | 2.731 | 0.542 |
| 2009 | 4220 | 101972 | 1867 | 6.625 | 8.122 | 1.226 | 7.748 | 1.170 |
| 2010 | 4058 | 98137 | 2062 | 10.445 | -3.839 | -0.368 | -3.761 | -0.360 |
| 2011 | 4134 | 98372 | 2247 | 8.972 | 1.873 | 0.209 | 0.239 | 0.027 |
| 2012 | 4124 | 93163 | 2472 | 10.013 | -0.242 | -0.024 | -5.295 | -0.529 |
| 2013 | 3674 | 85292 | 2803 | 13.390 | -10.912 | -0.815 | -8.449 | -0.631 |
| 2014 | 3202 | 87907 | 3084 | 10.025 | -12.847 | -1.282 | 3.066 | 0.306 |
| 2015 | 2775 | 91021 | 3355 | 8.787 | -13.335 | -1.518 | 3.542 | 0.403 |
| 2016 | 2587 | 94077 | 3417 | 1.848 | -6.775 | -3.666 | 3.357 | 1.817 |
| 2017 | 2637 | 115340 | 3417 | 0.000 | 1.933 | 22.602 | ||
| Average | 6.377 | -2.718 | -0.426 | 1.235 | 0.194 |
The price elasticity for enrollment or headcount is negative
which is normal considering that it is downward sloping.
It means that the enrollment will rise with lower tuition fees
while it will decrease as the tuition fees rises.
On the other hand, credit hours are supply side which has positive elasticity. A higher number of credit hours are offered at a higher level of tuition fees.
However, the fall in the enrollment is higher than the credit hours offered at a higher tuition fees and so that there might lower revenue despite the increase in tuition fees.
Calculate annual elasticities for both types of quantity variables (i.e., you will have an elasticity of...
Let’s examine the history of LSUS undergraduate enrollment vs. its tuition and fees. Download the “A3Q1 LSUS enrollment data” Excel file (in CSV format if you don’t have Excel); in it you will see historical information on LSUS undergraduate enrollment, total credit hour production, and tuition and fees. (If you wish, you can verify or look up additional information here, here, and here.) Calculate annual elasticities for both types of quantity variables (i.e., you will have an elasticity of price...