Assignment:
Discussion 1
University of San Diego says they will try to slow tuition increases Collapse
University of California San Diego, ranked the most beautiful campus in the U.S., will try to cut operating expenses to lessen tuition rate hikes. Robbins (2018) claims the school has increased tuition by nearly $15,000 over the last decade, which equates to about %150. While there has been student growth over the past decade, there has been a consolidation of labor force to distinct sectors due to future structural changes.
Societal forces provide a profound incentive to go to college for a comprehensive education that would allow for better job placement. This created an institution where the norm is to attend college after high school. Subsidizing or incentivizing student loans created an increase in demand due to a student's access to capital. The shift in demand, compounded by the rather inelastic supply of higher education, produced a steep incline of the price level. Guthrie (2013), a business professor at George Washington University, notes, as schools search for financial solutions to reduce or at least manage costs, they are faced with a myriad of equally destabilizing risks: new technologies that are redesigning the delivery of courses; a changing economy and job market; a soured opinion of the value of higher education; and states and a federal government reluctant to be partners in financing.
Financial statements are critical to effectively run an organization, which includes future projections of revenues and costs. The foundation and control mechanisms are established by the budget. San Diego University has a large headwind in realigning exigent supply costs with the decrease in demand. Time will continue to erode the inelasticity of education, which is demonstrated by additional derivative products of education. For example, online education, licensure, certificates, and other credentialing have become derivatives of the traditional college structure. These products create downward pressure on demand as society begins to accept alternative education methods. Universities are finally being forced to retool their business plans if they plan on being competitive in tomorrow's market.
Romans 1:25 says, they exchanged the truth of God for a lie, and worshiped and served created things rather than the Creator- who is forever praised. There is always deliberation of opportunity cost by way of marginal thinking. Does immediate gratification not allow us to see the Truth? If so, at what cost are we incentivized to make this determination?
References
Guthrie, D. (2013, Jan 22). Corporate universities: An emerging threat to graduate business education. Forbes.
Robbins, G. (2018, October 22). University of San Diego will try to slow tuition hikes by cutting operating costs. The San Diego Union-Tribune.
Discussion 2
Netflix's Pricing and Demand Collapse
Netflix's prices continue to increase yet its consumers continue to subscribe to the service; and, certain studies have discovered the logic behind Netflix's economic practices. Thanikachalam (2018) states that Netflix's "streaming revenue increased 36% from last year" though price adjustments left subscribers paying more (para. 2). Netflix utilizes the economic practice of increasing their prices in small increments, rather than large increments, that way they do not "scare subscribers", which can affect loyal customers or services containing exclusive content (Thanikachalam, 2018, para. 2). Furthermore, due to Netflix's popularity, amid its competing streaming services (i.e. Amazon Prime and Hulu), its large catalog of movies and shows, and the ease of us of its services, Netflix's subscriber base will only increase (Thanikachalam, 2018).
A few economic principles are embedded within this article, mainly the principle of demand. Due to the increased demand for Netflix's streaming services over the past few years, Netflix saw that it would be possible to raise prices without seeing a loss in subscribers. Demand for Netflix services tends to be relatively inelastic, due to the availability, ease, and extensive catalog that it boasts (Mateer & Coppock, 2018). By 2016, Netflix had expanded to 243 countries, with 14,450 movies and 2,200 tv shows (Aguiar & Waldfogel, 2018); thus, Netflix consumers view Netflix as a one-stop-shop, and Amazon Prime and Hulu could be considered Netflix supplements (Thanikachalam, 2018). Because of its popularity, Netflix controls the pricing for its services, while consumers continue to pay for a subscription. In setting its prices, Netflix utilizes small price increments to accomplish their revenue gains, since demand tends to be relatively inelastic rather than perfectly inelastic (Mateer & Coppock, 2018). For example, if Netflix were to suddenly double the cost of its subscription services, most consumers would find alternatives; however, since Netflix only raises its prices in small increments, they retain subscribers (Mateer & Coppock, 2018).
This author believes that Netflix's use of small incremental price increases is a smart and deliberate business decision, since they retain subscribers while also increasing revenue. However, due to the vastness of Netflix's services, many companies have suffered. For example, when Netflix started a DVD subscription service, the impact was a decline in DVD rental store revenue (e.g. Blockbuster, etc.). Furthermore, when Netflix launched its now popular streaming service, the result was a gross reduction in the sales of DVDs, services, and rentals. This author does not have an issue with Netflix increasing its prices incrementally; however, I do believe that Netflix should have competition, such as Amazon Prime and Hulu, or a service not yet launched, otherwise Netflix might become a monopoly and charge whatever they desire.
I do not believe a Christian's worldview would differ from a secularist's when discussing Netflix's pricing practices. Pricing is a common business practice that does not rely heavily on moral issues rather on economics, revenue, and profits. Yes, one could argue that due to an increase in price, a family would no longer be able to pay for Netflix which could cause them to shift a lower cost supplement (i.e. Amazon Prime and Hulu). However, Netflix is an entertainment service that one can live without.
References
Aguiar, L. & Waldfogel, J. J. (2018). Netflix: global hegemon or facilitator of frictionless digital trade? Journal of Cultural Economics 42(3), 419-445.
Mateer, D., & Coppock, L. (2018) Principles of microeconomics. New York, NY: W. W. Norton.
Thanikachalam, N. (2018). Netflix prices rise, but subscribers stay. The Daily Northwestern.