In order to assess whether raising tuition will increase or decrease revenue we need to determine what revenue is. Total revenue is the number of dollars that an organization receives from people who purchase its products or services (Amacher & Pate, 2013). The formula to compute total revenue is to multiply the price of each unit sold by the quantity of units sold. tr = p x q or total revenue = price x quantity
In the case of the Nobody State University, p (price) is the tuition students pay and q (quantity) is how many students are enrolled yearly. If the total annual costs are held constant, a raise in the amount of tuition paid by every student will result in an increase, in total revenue. However, raising the tuition may not result in an increase because there may be a decrease in students enrolling which would result in a decrease in revenue. In cases where the total annual costs are not constant, increase in tuition will not necessarily result in a rise in the total revenue.
There are many factors that determine the amount of revenue an organization will get. Costs (variable, fixed, and marginal costs) are factors that affect revenue (Khan Academy, n.d). For a school, the total cost is the money the school has to spend to teach the students. The balance determines whether revenue will increase or increase. An increase in the total annual revenue for the university happens under certain conditions. It will increase if the number of students enrolled increases or if the increase is high relative to the total costs incurred by the university.
If the university increases tuition, the total revenue earned by the university will fall if the raise in tuition results in a decrease in student enrolment or if the increment in tuition is accompanied by a relatively higher total costs. Constant revenue can happen if the raise in tuition is equal to the rise in total costs or if the raise results in lower student enrolment, with a negative effect equal to the raise in tuition.
To analyza the revenuefor Nobody State University, we can use price elasticity as tuition elasticity. Price (tuition) elasticity is a measure of the responsiveness of consumer (students) to increases in price (tuition), in terms of enrolment (Beattie & LaFrance, 2006). To determine this you divide percentage change in tuition by the percentage change in student enrolment. Just like people buying any other product, students respond to changes in tuition rates. The Nobody State University (NSU) may raise tuition either through direct increase or cuts to scholarships and other financial aid. Unlike people who buy other products, students are less likely change due to tuition raises. Because of this universities have been able to increase their revenue by raising tuition rates. Elasticity of demand or in this case tuition elasticity, is a ratio that estimates the change in student enrolment due to changes in tuition. The higher the tuition elasticity, the higher the change in student enrolment is to changes in tuition. The Nobody State University should be very careful with this ratio. If the university depends on tuition as the primary source of revenue they should be especially wary of increasing tuition. Nobody State University can raise its tuition if the student enrolment isn’t likely to change due to tuition raises. This is indicated by a ratio that is less than 1. If the ratio is greater than 1, it means that students are very sensitive to the price of tuition. In this case, an increase in tuition will result in a decrease, in both enrolment and revenue. Student Responsiveness | Tuition Elasticity | Increase in Tuition | Decrease in Tuition | | | Enrolment | Revenue | Enrolment | Revenue | Unitary | n=1 | decrease | constant | increase | constant | Elastic | n>1 | decrease | decrease | Increase | Increase | Inelastic | n<1 | decrease | Increase | increase | decrease |

Therefore, if the price elasticity of the Nobody State University is 1.2, it means the students are more likely to respond to changes in tuition. A rise in tuition will mean a decrease in enrolment and in revenue.
Therefore, price elasticity is very important in making a decision on increasing tuition. This is especially important if a university uses tuition as their primary source of revenue. Therefore, the sensitivity of students to change in tuition is a major factor on the effect it will have on the universities revenue. Therefore, any change to the tuition fee must be based on the price elasticity ratio. Raising tuition has an effect on student enrolment and the universities revenue, depending on the price elasticity. Elasticity depends on many factors such as if the students can afford a raise in tuition and if they can get the same education at a different university for lower tuition. Therefore, the president of Nobody State University should only raise the tuition if the calculated price elasticity ratio is less than one. Otherwise, the university should use different option to raise their revenue. The university can use fundraising and other promotions for the public to see the quality of their services and increase their enrolment which will increase their revenue.

References
Amacher, R., & Pate, J. (2013). “Microeconomics Principles and Policies”. San Diego, CA: Bridgepoint Education, Inc.
Beattie, B. R., & LaFrance, J. T. (2006). “The law of demand versus diminishing marginal utility”. Review of Agricultural Economics, 28(2), 262-271. Retrieved from EBSCOhost database. doi:10.1111/j.1467-9353.2006.00286.x
Khan Academy (n.d). “Fixed, variable, and marginal costs”. Retrieved from http://www.khanacademy.org/science/microeconomics/firm-economic-profit/average-costs-tutorial/v/fixed--variable--and-marginal-cost