The article by Norton A. (2016) provides an
overview of higher education policy and trends including enrolment numbers,
courses chosen by local and international students as well as enrolment trends
and employment outcomes in science, IT and engineering. This paper, firstly, throws lights on market
analysis as well as demand and supply analysis. Secondly, it explains the
concept of price elasticity of demand and its types. Lastly, it provides a deep
analysis of positive and negative externalities and it also explains whether
education providers are positive or negative externalities and why.
Market & Demand and Supply analysis:
Competition: In the given
scenario, there is perfection competition in the market as it satisfies the
definition of Perfect Completion Market system because there are many sellers,
(40 full universities and around 130 other higher education providers) and
buyers (nearly 350,000 international and one million domestic students) in the
market. Mankiw & Taylor (2011) stated that with so many market players, it
is impossible for any one participant to alter the prevailing price in the
Norton A. (2016)
stated that in engineering, Australia’s higher education system is
performing very well as demand and supply of engineering places respond to
labour market conditions, although the time taken to complete degrees
inevitably means periodic under- or over-supply of graduates. In spite of
fluctuation in demand for engineers, engineering graduates find high-skill jobs
more easily as compared to STEM graduates. So, it can be said that there is
enough market supply to meet market demand (Mankiw & Taylor 2011). So, in this case, equilibrium is the point where the quantity demanded equals the quantity
supplied. This means that there’s no surplus of professionals
and no shortage of jobs.
The given diagram clearly illustrate the relationship
between demand and supply for engineers.
In the case of IT
Profession, universities are not supplying the graduates to meet the demand of fast-moving industry. It means demand is
higher than supply. So, the new equilibrium
point will be above than the old point, as shown in the following diagram and there
is negative relationship between demand and supply (Mankiw & Taylor 2011).
In science, the labour market is over-supplied with
coursework graduates. The number of science graduates is higher than for
engineering or IT, but the number of jobs are lower. In other words, supply is
higher than demand. So, Mankiw & Taylor
(2011) stated that there is
negative relationship between Demand and Supply and the new equilibrium point is lower than the old point, as shown in the following diagram and
there in unemployment in this sector.
Price Elasticity of Demand
Gaetan & Bruno (2012)
stated that Price elasticity of demand occurs when the
variation in demand leads to a variation in price. It can also be defined as
the ratio of the percentage change in demand to the percentage change in price
of particular commodity.
formula for the coefficient of price elasticity of demand is given below:
Types of Price Elasticity of
Ø Perfectly Elastic Demand:
(2008) agued that when a small change in price of a product causes a major
change in its demand, it is said to be perfectly elastic demand. In perfectly
elastic demand, a small rise in price can lead to fall in demand to zero, while
a small fall in price causes increase in demand to infinity.
Ø Perfectly Inelastic Demand:
Gaetan & Bruno (2012) stated that a perfectly inelastic demand occurs when there is no
change produced in the demand of a product with change in its price. The
numerical value for perfectly inelastic demand is zero (ep=0).
Ø Relatively Elastic Demand:
Relatively elastic demand means the demand when the
proportionate change produced in demand is greater than the proportionate
change in price of a product. The value of relatively elastic demand ranges
between one to infinity (Robert 2008).
Ø Relatively Inelastic Demand:
& Bruno (2012) stated that relatively inelastic demand refers to demand when the
percentage change produced in demand is less than the percentage change in the
price of a product. The numerical value of relatively inelastic demand ranges between zero to one (ep