The Classical Business Model Of High Fixed Cost Essay

800 Words Oct 29th, 2016 4 Pages
College is considered to be one of the most expensive investments many families across America pay for. The average cost for a private intuition is 35,000. While a Public four-year college tuition average cost is 14,000. All this money just to get a piece of paper, but this piece of paper called a degree can open many doors for survival. Some people believe that college is too expensive, but in all actuality college prices are fair and part of the business.
“ The issue is clear: colleges, as a rule, will try to charge as much as someone is able to pay” (Gobry). This is the classical business model of high fixed cost, low marginal cost businesses: everyone gets quoted a different price for airline tickets and hotel rooms because these businesses have high fixed costs and low marginal cost, and so they try to capture as much of the consumer surplus as they possibly can. Especially in todays time when you need a degree to get the job that you want getting a higher education is almost mandatory. Although, if colleges didn’t charge high prices then it will be almost impossible to even keep the system running.
Based on the average university it makes sense that they charge families at a high price. Colleges need to pay for food, campus activities, maintenance, salaries and much more. Without money then the universities cannot meet expectations for students demand in a good quality experience and education. Also everyone situations is different when paying the cost for…

Related Documents