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The Undergraduate Fee and Enrolment Decisions Facing Australian Universities from 2005


  • Ross Guest


This paper presents an economic framework for analysing the undergraduate fee and enrolment decisions facing Australian universities after the legislative reforms that are due to take effect from 2005. The fee/enrolment problem is expressed both algebraically and diagrammatically in terms of the standard microeconomic concepts of marginal cost, demand, marginal revenue, and linear constraints on output and price. This conventional economic framework yields several insights. First, the government-imposed quota on fee-paying places is shown to be undesirable on efficiency grounds and argued to be undesirable on equity grounds. Second, given that universities are concerned about student quality, a drop in demand for a degree programme does not necessarily imply a lower optimal level of student fees. Third, it can be optimal for the university to offer full fee places even though it is not charging the maximum premium on its government-sponsored places (Higher Education Contribution Scheme places).

Suggested Citation

  • Ross Guest, 2006. "The Undergraduate Fee and Enrolment Decisions Facing Australian Universities from 2005," Education Economics, Taylor & Francis Journals, vol. 14(1), pages 59-73.
  • Handle: RePEc:taf:edecon:v:14:y:2006:i:1:p:59-73
    DOI: 10.1080/09645290500481881

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    Student fees; HECs; optimal fees; optimal enrolment;


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