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The Impact of the Deregulation of Australian Tertiary Fees Efficiency of the Price Ceiling

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Added on  2020-03-16

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Deregulation of Australian Tertiary Fees 6 Running Head: Deregulation of Australian Tertiary Fees The Impact of the Deregulation of the Australian tertiary Education Fees Efficiency of the Price Ceiling Bearing the fact that tertiary education is paramount for growth, the Australian government had imposed a price ceiling on its acquisition. Fig: Price ceiling on school fees Supply 2 Supply 1 FR Fee Price ceiling F* F Demand Q1 Q* Quantity The initial equilibrium fee is F* and the number of students enrolling at this fee is Q

The Impact of the Deregulation of Australian Tertiary Fees Efficiency of the Price Ceiling

   Added on 2020-03-16

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Running Head: Deregulation of Australian Tertiary FeesThe Impact of the Deregulation of the Australian tertiary Education FeesStudent NameInstitutional AffiliationCourse/NumberInstructor NameDue Date
The Impact of the Deregulation of Australian Tertiary Fees Efficiency of the Price Ceiling_1
Deregulation of Australian Tertiary Fees2The Impact of the Deregulation of the Australian tertiary Education FeesEfficiency of the Price CeilingBearing the fact that tertiary education is paramount for growth, the Australian government had imposed a price ceiling on its acquisition. This was meant to ensure that the feespaid by the students were affordable and thus many students would be able to enroll in the tertiary institutions. This is one of the ways in which the government maintained an improvement in the Australian social welfare since the supply of tertiary education by the free market would bring about some market failure. A price ceiling on school fees is the maximum fee that the tertiary education could chargethe students who enroll in the institution (Coates, 2017). The ceiling is always set above the equilibrium fee so as to create an allowance for a small fee increment as the demand increases. Alower fee for enrollment into the tertiary education is attractive to many students and thus the demand goes up; an increased demand results in the suppliers raising their prices. However, the price ceiling limits the magnitude of this change in price; thus, the price charged across all tertiary institutions is uniform and slightly above the equilibrium price.Fig: Price ceiling on school fees Fees Supply 2Supply 1FRFee Price ceilingF*FDemandQ1 Q*Quantity
The Impact of the Deregulation of Australian Tertiary Fees Efficiency of the Price Ceiling_2
Deregulation of Australian Tertiary Fees3The initial equilibrium fee is F* and the number of students enrolling at this fee is Q*. A fee price ceiling FR is set above F*; since the fee is higher, there is a reduced demand for tertiary education from Q* to Q1. The supply falls from supply 1 to supply 2.Fee Deregulation The aim of deregulation is to help the providers of higher education (Education.gov.au, 2016). A free market without government regulation would charge higher prices which would make the acquisition of higher education more expensive such that fewer students would be able to enroll at the high fees (Parker, 2016). The enrollment level will fall and some of the ongoing students will be forced to drop out; consequently this would lower the number of Australian graduates in the coming years. Using the same graph used above let’s consider the impact of the elimination of the price ceilingFig: Price ceiling Elimination FeesSupply 3F1Supply 2Supply 1FRFee Price ceilingF*FDemandQ2Q1 Q*QuantityThe price ceiling caused the price to rise to FR and quantity demanded to fall to Q1. Now,the elimination of fee price ceiling will enable the tertiary institutions to charge a higher fee above the fee price ceiling. This again will force the fee to rise further to a point say F1; this will be accompanied by a further decrease in demand from Q1 to Q2. The supply falls further from supply 2 to supply 3. Very few number of students will be interested to enroll at a free market tertiary education school fees.
The Impact of the Deregulation of Australian Tertiary Fees Efficiency of the Price Ceiling_3

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