MANAGERIAL ECONOMICSMANAGERIAL ECONOMICS

Guided By: Prof. M. DashGuided By: Prof. M. DashPresented By: Group FourPresented By: Group Four

According to Point ElasticityAccording to Point Elasticity

No. of the student in the school = 6000 (Q1)No. of the student in the school = 6000 (Q1)Tuition fee in the school = Rs. 150,000 (P1)Tuition fee in the school = Rs. 150,000 (P1)Tuition fee increased by 25 %Tuition fee increased by 25 %Therefore, tuition fee after hiking = Rs. 187,500 (P2)Therefore, tuition fee after hiking = Rs. 187,500 (P2)No. of the students in the school after hiking fees = ?? No. of the students in the school after hiking fees = ??

(Q2)(Q2)Price elasticity of demand = -1.2 (ep)Price elasticity of demand = -1.2 (ep)Their present resource pool = Rs. 90croresTheir present resource pool = Rs. 90croresTheir estimated resource pool = Rs. 112.5croresTheir estimated resource pool = Rs. 112.5crores

As we know that,As we know that, dQ/dP . P/Q = epdQ/dP . P/Q = epTherefore, dQ/37500 . 150000/6000 = -1.2Therefore, dQ/37500 . 150000/6000 = -1.2 dQ = -1800dQ = -1800Therefore, no. of students after hiking the fees Therefore, no. of students after hiking the fees

= 6000-1800 = 4200 (Q2)= 6000-1800 = 4200 (Q2)Therefore, after revenue would be Therefore, after revenue would be 4200 x Rs. 1875004200 x Rs. 187500 Rs. 78.75croresRs. 78.75crores

From the above figure, we haveFrom the above figure, we havePercentage change in fees = 25%Percentage change in fees = 25%Therefore, percentage change in strength of the Therefore, percentage change in strength of the

students = 6000 . X% = -1800students = 6000 . X% = -1800 X = -30%X = -30%It implies that the strength of the student decreases It implies that the strength of the student decreases

by 30%by 30%Therefore, we can see that with a 25% increase in Therefore, we can see that with a 25% increase in

fees leads to 30% decrease in strength of the fees leads to 30% decrease in strength of the students.students.

CONCLUSION: CONCLUSION:

Prior to the implementation, resource pool Prior to the implementation, resource pool would have been Rs.112.5cr but after would have been Rs.112.5cr but after implementing it would be Rs.78.75cr, implementing it would be Rs.78.75cr, which is even less than the present which is even less than the present resource pool of school i.e. Rs.90cr.resource pool of school i.e. Rs.90cr.

So, as a managerial economist we would So, as a managerial economist we would not advice the school management to not advice the school management to implement the hike in tuition fee by 25%implement the hike in tuition fee by 25%