Question

What is the reason for the market change in regards to online education; more specifically please advise the market demand, market supply, equilibrium quantity (output) and equilibrium price for online education.

Answer 1

Over time, online education is getting more widely available at an increasingly lower, competitive price. It can be explained as follows.

There is increasing demand for online education from people who are working full-time and cannot afford to quit their job and join higher education full time. Therefore, demand curve has shifted rightward, increasing price and increasing quantity. At the same time, more colleges are offering online courses, increasing its supply, shifting supply curve rightward, decreasing price and increasing quantity. However, market trends suggest a fall in online course price, which indicates that rightward shift in demand curve is lower in magnitude than the rightward shift in supply curve, leading to lower price and higher quantity.

In following graph, D0 and S0 are initial demand and supply curves intersecting at point A with initial price P0 and quantity Q0. As D0 shifts right to D1 and S0 shifts right to S1, they intersect at point B with lower price P1 and higher quantity Q1.