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Summary of case

Our country has a quality education in higher education,

in the field of engineering, medicine or management. It
has low price then other countries.
University Grant Commission (UGC) is the central body
that gives grants to various universities and colleges.
Colleges want to hike their fees and quality education in
future. But UGC did not give any grant.
Many colleges reacted negatively to this decision of the
UGC- Saraswati College was one of them. The managing
committee of the college has meeting with the principal
and decided that for quality of education, the student had
to pay more fees. The increased fees average was 75%.
The meeting between students union and the managing
committee, students also protest against it. The
managerial economics student came up with a brilliant
idea and analysis the fee structure of all the subjects.
They found that on an average whenever the college hike
the fee of any course there had been a decrease in the
number of students or the students had either moved to
other courses or colleges (expect commerce, economics
and management).

For example: - Tea and Coffee

When the price of tea increases then demand of tea
decreases then customer move to substitute goods like
coffee. Which shows positive relationship or there is a
direct relationship between price of one product and
demand of other product.
Further investigation divided students into three
categoriesGROUP 1:- consisting of Commerce, economics and
GROUP 2:- consisting of English, mathematical statistics,
Mathematics and applied psychology and
GROUP 3:- consisting of all other subjects.
They analyse that Group1 students did not show any
interest towards leaving their course when fees were
Group2 students showed more interest to leave if fee
were hiked.
Group3 majority of students studied i.e. consisted of 60%
of the students in the colleges. It was studied that 2000
students were currently enrolled given fee structure and

reduced the 1.2% enrolment number with every 1% hike

in fee.
The economic students analysis that the college revenue
will goes into losses if they hike the fee structure.


College profile
Saraswati College Logo/ Emblem- The motif - design is conceived by drawing 'ONE'
seven times diagonally and locked into a triangle shape to symbolize Maa Saraswati
Goddess of Knowledge and Learning, this motif is in Vogue in Maharashtra State of
How ever " Vidyav Paramgyanam " sanskrit word means "Education is the Supreme
"Saraswati College of Professional Studies" was established in the year 2003-2004
under ageis of "Maa Saraswati Shiksha Samiti".
The college is situated in the clean and healthy environment at Adhyatmic Nagar
(Dasna), National Highway-24 (Delhi-Hapur Bye-pass )in Ghaziabad. Presently the
college is imparting education to would be secondary teachers leading to the award
of Degree of Bachelor of Education. The college is affiliated to Chaudhary Charan
Singh University, Meerut & approved by National Council of Teacher Education
(NCTE) , and Governmen t of Uttar Pradesh.
The Ultimate goal of the college is to prepare effective secondary school teachers
who are capable of responding to the changing needs of the modern Indian society
so as to produce responsible Indian citizens committed to National integration
through democratic interaction.

Vision and Mission

Vision:Our vision is to develop qualified world class competent Teachers with the requisite
skills , knowledge , values ,attitude and professionalism to become responsible
citizens in a competitive and global environment.
Our Mission :

To make SCPS the first choice of students and staff by imparting excellent ,
education , cultural activities and sports.

To provide an environment for the disciplined & integrated development of

students staff to give their best to the society.

To train students to become effective leaders & team players by enhancing

their knowledge confidence and creativity.

Help students to discover their inner potential and strengths so that they get
the vigour to set the highest goals & achieve them.

Provide a curriculum designed in accordance with the current education

scenario in the country.

To stimulate in the students a spirit of inquiry & desire to gain knowledge &
skills that enriches their lives in future.

Empower students with request teaching skills, knowledge, values &

predestination required for the teaching profession.

Organize quality improvement program for faculty members.

Hike in the fees prices leads to reduction in demand.
The main problem find in this case study is that there is
hike the fees structure and the students were not ready to
pay.There are some factors which directly effects to
demand and govt. policies are one of them.
The managing committee decided the if you want to
maintain the same quality of education we have to
increase the fees structure on an average basis by
75%.And the students calculated that the total revenue
earned would actually fall with increase in fee structure
and will outweigh the rise in revenue
In this case change in govt. policies affects to demand.
due to privatization in the economy the taste and
preferences has been changed.

Principal of colleges argued the if we hike the prices ,we

will able to increase the revenue,it will help us to expand
the number of course in college.
Another problem faced by the college is that no doubt
with increase in fees prices they will able to generate the
revenue but impact will be on demand,it will fall.In other
words we can say that either the students will leave the
college due to increase in fees or they will choose
substitute courses available in the college.



Question no2- Assuming that the students are consumers

availing of educational service, how will you differentiate
between the behaviours of the Group 1, Group 2 and
Group 3 consumers?
Answer- If there is hike in fee structure there will be
change in students behaviour to leave their courses or
either moved to other courses or colleges.
There are 3 groups of consumersGROUP 1- Students did not show much inclination
towards leaving their course even when the fees were
In terms of elasticity, It is relatively Inelastic demand.
-The % change in quantity< % change in price.
-A large change in price brings about a small change in
quantity demanded.

GROUP 2- Students showed more of an inclination to

leave if the fees were hiked.
In terms of elasticity, it is unitary elastic demand.
-% change in quantity= % change in price.
-change in price brings about an exact change in quantity

GROUP 3- The group 3 consists of 60% of the students in

college. There would be a 1.2% fall in enrolment no. with
every 1 % hike in the fee.
In terms of elasticity, it is relatively elastic demand.
- % change in quantity > % change in price. Ed>1
Small change in price brings about a large change in
quantity demanded

Question no 2 law of demand by managerial students
AnswerAfter the deep study of this situation the students of managerial
economics fitted concept of law of demand into it.
Law of demand The law of demand is when the price is increased the demand will go down
and vice versa.

Same thing is happening in this case when the college hiked the fees
structure there had been decrease in the number of students or they will
shift to other course and colleges.
Another conceptManagerial ecos students also taking about the subsitute courses.
Earlier we studied the subsitute products like tea and coffee. Here in this
case this concept is also applied if the fee will increased demand will go
down nd demand of other course/colleges will increased and this shows
the +ve relationship
Same courses

other courses/

Fees increased, demand decreased.

Demand increased
It shows the positive relationship b/w substitute courses.

In this case study, college hike their fee structure it
leads to decrease in students. Students moved to other
courses or college due to increase in fee structure. Law
of demand applies in this case that if the prices
increases, Quantity demanded of a commodity
decreases. So the college decision that hiked fee would
result in hiked revenue proves wrong. College should
not go with the decision of hiked fee because there is
law of demand applies that decrease of the students
with increase in fee. Total revenue earned would
actually fall with the increase in fee structure. College
will be a loser if there was a general fee hike.