E2E Economics to Education

When I first studied economics, I learned the demand and supply curves.

The theory suggests that if demand increases, the price will increase. There is not enough quantity or resources for distribution or allocation described by the graph:

Demand Curve

This will be the natural logic to apply. The demand pushes the price up. It is not what most people want to buy more when prices are up. Sometimes some speculative decision will make people buy more when prices are up to take advantage of the future increase.

Sometimes some people are irational.

The theory also suggests that if supply increases, the price will decrease. The logic is based on mass production can reduce the unit price. In most business, it is always cheaper if consumers buy in bulk. Buying less always have to pay more. The logic did not account for quantities or resources restriction described by the graph:

Supply Curve

Using the costing formula for pricing will illustrate the logic of the supply curve:

cost = fixed cost + quantity x unit cost

price = cost/quantity + profit

So price is inversely proportional to quantity.

So businesses always have to budget for the quantity to determine the price which is competitive with the market. In other word, monopoly can control the pricing.

For Education, similar logic can be applied for public education and private education models as well as their performances.

For example, private and for profit education and have either goals:

Private Education 2Private Education 1

Some private education provides poor education just for profit. Another kind of private education provides good education but resulting good profit. Why?

Depending on the goal of the private education, a good private school provides ethically sound system to help students learned and good education brand will attract more students and as the cost of education is not increased by the number of intakes, the profit can increase. On the other hand, the poor performed private school may be able to survive if there are people coming in to buy the diplomas. Time can tell and market will tell the students are in demand or not.