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Demand courses in the amount qn

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UON is revising the pricing of its PHD program.The new tuition structure may include an annual tuition,a charge per course-hour or both.A study of UON applicants shows that their willingness to pay for a UOJ education can be stated in terms of a demand for course hours. Also UON students can be divided into two groups "normal" students (N) and workaholics (W) in terms of the number of hours they demand if the school imposed a charge per course-hour.Each of the normal students will demand courses in the amount QN= 100-0.25p

where Q is the number of course-hours per academic year and P is the price per course hour.Each of the workaholics has a demand of Qw=200- 0.5p

The school will admit 180 students from each group (students may choose not to enroll). The marginal cost to the school is constant at Shs 1000 per student course hour.UON'S fixed cost is Shs 2.0million per year.

For each of the following pricing schemes, please derive the optimal price structure and the total profit on the assumption that the UON's objective is to Maximize profit for the program.

a) A single fixed tuition per academic year (with zero price per course-hour) with no limit on number of course hours.Hint:UON may decide to induce both types of students to enroll or just the workaholics.

b. A single tuition per academic year plus a single fee per course hour.Hint:Again,UON may decide to induce both types of students to enroll or just the workaholics.

c) A system that discriminates between the two groups, with a two part structure of annual tuition and per hour fees for each.In other words UON can identify the different types of students and offer each type different two part tariff.

Reference no: EM132500517

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