ANALYZING MANAGERIAL DECISIONS: Setting Tuition and Financial Aid The Board of Ursinus College in Pennsylvania Admissions Director, Susan Hansen, to increase raised its tuition and fees 17.6 percent to $23,460 tuition and to reduce financial aid to students. in 2000. It subsequently received 200 more appli- Susan argues that the data from competing colleges cations than the year before. The president of the suggest that the demand curves for colleges slope college surmised that "applicants had apparently upward-the quantity demanded increases with concluded that if the college cost more, it must be price. Susan projects that the increase in tuition and better." Other colleges that raised tuition to match reduction in financial aid will solve the school's fi- rival colleges in recent years include University of nancial problems. Last year, the college enrolled Notre Dame, Bryn Mawr College, Rice University, 400 new students who each paid an effective tuition and the University of Richmond. They also experi- of $15,000 (after financial aid), totaling enced an increase in applications. In contrast, $6,000,000. She projects that with the increased North Carolina Wesleyan College lowered their tu- demand from charging an effective tuition of ition and fees about 10 years ago by 22 percent and $25,000, the college will be able to enroll 600 new attracted fewer students. The college president con- students (of equal or better quality), totaling cluded that "it didn't work out the way it had been $15,000,000. Evaluate Susan's analysis and hoped. People don't want cheap." recommendation. You are hired as a consultant to a President of a liberal arts college in the East. You are asked to Source: J. D. Glater and A. Finder (2006), "In Twist on Tuition Game, Popularity Rises with Price," nytimes.com evaluate a recommendation by the college's (December 12)