Survey Results: Demand Schedule

Below you will find a table containing the results of the survey which you took part in. As you would expect, there seems to be a pronounced negative relationship between the prices (tuition) and the number of applicants. Everyone in the survey had a price past which they would not pay. When we added all of the surveys together, we arrived at the following table. At a price of $9,000, there were 16,600 people willing to pay the tuition, but by the time we got to a price of $12,000, there were only 15,900 willing to pay. In that $3,000 range we lost 700 applicants. In technical terms, the increase in the price of school (tuition) by $3,000 caused a decrease in the quantity demanded by 700.

Original Survey Results

We are now ready to take a somewhat different look at this information. It is now time to look at a graphical representation of the data.  If we return to the first survey results and graph the relationship between the price (tuition) and quantity (number of applications), we obtain the following graph. At a price of $15,000, there are 15,200 applicants to the university.  The picture of this is called the Demand Curve.

Before we move on, please take a moment to make a short list of the factors that influenced your decision in the survey. Would your answers have been different if URI's reputation were different?  Would you have been willing to pay more if a strong economy had allowed your parents to provide more support for you, or you had been able to earn more to defray the cost of college?  What if the costs of all other universities were higher?

Now let's consider how the survey result would have been different if URI's basketball team made it to the NCAA finals which gave the school's programs some national exposure. We should not be surprised that at each price there would be more applicants.  In fact there are 2,000 more applicants at each price. In more technical terms, we would say that in response to the good PR, the university had experienced an increase in demand.

Supplementary Survey Results

How do we represent the increase in demand? As you can see from the graph below, an increase in demand shows up as an outward shift in the demand curve. Now at a price of $15,000 there are 17,200 applicants.

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Supply

Market