A university charges the same tuition and fees for students who take 12 credits per term as those who take 18 credits per term. Those who average 18 credits per term can easily graduate (obtain their baccalaureate degree) in 3½ years while those who average 12 credits per term will take at least 5 years to graduate.
a. Explain how this is a form of price discrimination even though everyone pays the same price each term.
b. Explain what assumptions are being made about the relative elasticities of demand for education for those who average 12 credits per term in comparison to those who average 18 credits per term.
c. Rationalize why those elasticities (from part b) might be correct, or is the university making a mistake by pricing in this manner?Explain fully.