Question

Few years ago, a well known liberal arts college decided to lower tuitions to make education more affordable to its students. Very much to the surprise of the administration, the following year enrollment declined. Taking note, the college decided to raise tuition back to the previous level and use the extra money to provide students with laptops, tablets, etc, in effect maintaining the cost of college at the intended, lower level. The result: enrollment increased. Is this a violation of the law of demand? What could explain the observed changes in enrollment?

Answer 1

ANSWER-   Yes this is the violation of the LAW OF DEMAND.

This is because the law of demand states that there is an inverse relationship between the price and the quantity demanded by the consumer. But in the above case as soon as the college decided to lower the fees of the students in order to promote more education the demand for the enrollment declined which was the violation of the law of demand.

In the above situation the lowering of price did not increase the demand for the enrollment but the other than price factors served the purpose.

When the students were provided more facilities of laptops and tablets and the cost was maintained at the same level than before the demand increased again due to the more facilities provided by the college. This was because the students were being provided more facilities and the modern techniques of education at the same prices which encouraged them to take education.