Economics Paper PP

8/2/2019 Economics Paper PP

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Master of Business Administration

Business Economic

Dr. Doaa Salman

(Research paper about Accreditation Market)

Submitted By:

Mohamed S. FaragAbdullah Msouti

Hatem S. Farag

Ibrahim El-oraby


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Overview

NAQAAE is the accrediting body for all Egyptian educational

institutions (higher education, pre-university, and Al-Azhar education)(about 55,000 educational institutions).

NAQAAE was established in 2007 by a presidential Decree. The Board is

formed of a President, three Vice- Presidents and eleven board members

selected from educational experts, businessmen and entrepreneurs.


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Main Goal

Raising awareness of educational quality assurance among theEgyptian Academic Institutes and the Egyptian Society

Establishing an integrated system for accreditation Setting up educational standards and performance assessment

indicators.

Supporting the Egyptian Educational Institutions in their preparationof self assessment

Asserting confidence and establish accountability in the educationaloutcomes.


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Responsibilities of NAQAAE

According to NAQAAE establishment law, the authority is responsiblefor evaluating more than 55,000 educational institutions to be accredited

within 5 years, such institutions are categorized as follows:

A. Higher Education: A Total of 623 institutions (34 universities,589 faculties and institutes) with a total of approximately 4 millionstudents.

B. Pre-University Education: A total of 49,640 educationalinstitution hosting 18,482,872 students. These institutes include

governmental schools, private schools.


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C. Al-Azhar Education:a. Al-Azhar University: 64 faculties and 420,000 students The

64 faculties are distributed among 16 governorates.

b. Al-Azhar Pre-University Education: 8000 schoolsdistributed across Egypt.

D. Technical education: A total of 2063 technical schools


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arket Type

Is aMonopoly because:

It is the sole seller of its product by the presidential decree

Its product does not have close substitutes.arket Segment

All educational institutes.


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The Demand and Supply (Year 2009/2010):

Month Price Demand Supply

July 25,000.00 0 500August 25,000.00 0 550

September 25,000.00 0 605

October 25,000.00 139 666

November 25,000.00 195 732

December 25,000.00 83 805

January 22,500.00 0 886

February 22,500.00 95 974

March 22,500.00 349 1072

April 22,500.00 700 1179May 22,500.00 73 1297

June 22,500.00 0 1427


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The table above represents the demand and supply for the accreditation

service among the educational institution.

Demandis represented by number of educational institution applying for

institutional accreditation.

Supply is represented by the number of preview teams capable of doing

previewing visits (each team consisting of a chairman and 3 assistants

pre-selected and trained on the process of review by the TrainingDepartment of the Authority, representing capacity production of the

Authority and is increased periodically through the admission and

training).

The following curves will give a better understanding for the effects on

the demand and supply regarding duration and price .


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emand & Supply (Quantity Duration):

0

200

400

600

800

1000

1200

1400

1600

May July August October December January March May June

Quantity

Duration

Demand

Supply


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emand & Supply (PriceQuantity):

22,000.00

23,000.00

24,000.00

25,000.00

26,000.00

0 200 400 600 800 1000 1200 1400 1600

Price

Quantity

Demand & Supply

Supply

Demand


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Factors affects demand & supply:

Some of the factors which affect the Demand and Supply are

SeasonalityThe demand effected by the academic year, which begins with the

mid-September and ends mid-May as the process of technical

support and accreditation process takes place during the study

period and therefore we find that the holiday season (mid-term

holiday or summer holiday) affect the demand.

PriceIf there is an increase in prices will be offset by a decrease in The

demand will occur (Surplus) and vice versa if there was a decline in

prices will be offset by an increase in demand could lead to theoccurrence of a gap between The demand and supply (Shortage).


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The Elasticity:

Point Price Demand * Supply *

Point A 25000 70 643

Point B 22500 203 1139

Q / P 9.30 5.30

Price Elasticity Elastic Elastic

* We Calculate the Elasticity by taking the average quantity demanded

and quantity supplied.

The elasticity


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rice Elasticity of Demand

By calculating the price elasticity for the demand, we find that in the

short run it is elastic, but in the long run it will turn into inelastic andthat because the Government's decisions binding on educational

institutions must obtain accreditation certificate.

22000

22500

23000

23500

24000

24500

25000

25500

0 50 100 150 200 250

Price

Quantity

Demand Elasticty


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rice Elasticity of Supply

By calculating the price elasticity for the supply, we find that in the short

run it is elastic, but in the long run it will turn into inelastic and thatbecause the supply will reach its full capacity.

22000

22500

23000

23500

24000

24500

25000

25500

0 200 400 600 800 1000 1200

Price

Quantity

Supply Elasticty


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The Cost & Revenue Curve

The Revenue Of the Market

Quantity(Q)

Price *Revenue

(R)AverageRevenue

(AR)

MarginalRevenue

(MR = R / Q)

0 25,000.00 0.00 0.00 0.00

73 25,000.00 1,825,000.00 25,000.00 25,000.00

83 25,000.00 2,075,000.00 25,000.00 25,000.0095 25,000.00 2,375,000.00 25,000.00 25,000.00

139 25,000.00 3,475,000.00 25,000.00 25,000.00

195 25,000.00 4,875,000.00 25,000.00 25,000.00

349 25,000.00 8,725,000.00 25,000.00 25,000.00

700 25,000.00 17,500,000.00 25,000.00 25,000.00

* Price to be determined annually by the Board of Directors of the Authority in the form of segments of

a maximum of 50000 LE for a single institution, depending on the number of students and fees of the

institution


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0.00

45,000.00

90,000.00

135,000.00

180,000.00

225,000.00270,000.00

315,000.00

360,000.00

405,000.00

450,000.00

0 100 200 300 400 500 600 700

Revenue

Quantity

The Revenue Of the Market

Revenue

Average Revenue

Marginal Revenue


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The Cost Of the Market

A. Fixed, Variable and Total CostQuantity

(Q)

Fixed Cost1

(FC)

Variable2

Cost

(VC)

Total Cost

(TC)

0 480,000.00 0.00 480,000.00

73 480,000.00 1,022,000.00 1,502,000.00

83 480,000.00 1,162,000.00 1,642,000.00

95 480,000.00 1,330,000.00 1,810,000.00

139 480,000.00 1,946,000.00 2,426,000.00

195 480,000.00 2,730,000.00 3,210,000.00

349 480,000.00 4,886,000.00 5,366,000.00

700 480,000.00 9,800,000.00 10,280,000.00


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1. Fixed costs: consisting of wages for labor, rent for the mainbuilding and branches in the governorates and expenditures for

administrative affairs.

2. Variable costs: consisting of special pay external auditors for theaudit, accommodation and travel allowances (wages and transport

allowances to be determined annually by a decision of the Board

of Directors - Accommodation is contracted annually with a group

of hotels in all over Egypt)


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0.00

100,000.00

200,000.00

300,000.00

400,000.00

500,000.00

600,000.00

700,000.00

800,000.00

900,000.00

1,000,000.00

0 100 200 300 400 500 600 700

Cost

Quantity

Fixed, Variable and Total Cost

Fixed Cost

Variable Cost

Total Cost


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A. Average and Marginal Cost

uantity(Q)

AverageFixed Cost(AFC)

AverageVariable Cost(AVC)

AverageTotal Cost(ATC)

MarginalCost(MC = TC / Q)

0 0.00 0.00 0.00 0.00

73 6,575.34 14,000.00 20,575.34 14,000.0083 5,783.13 14,000.00 19,783.13 14,000.00

95 5,052.63 14,000.00 19,052.63 14,000.00

139 3,453.24 14,000.00 17,453.24 14,000.00

195 2,461.54 14,000.00 16,461.54 14,000.00349 1,375.36 14,000.00 15,375.36 14,000.00

700 685.71 14,000.00 14,685.71 14,000.00


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0.00

100,000.00

200,000.00

300,000.00

400,000.00

500,000.00

0 100 200 300 400 500 600 700

Cost

Quantity

Average and Marginal Cost

Average Fixed Cost

Average Variable Cost

Average Total Cost

Marginal Cost


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The COST and the Revenue of the Market

A. Cost & Revenue Curve

0.001,000,000.00

2,000,000.00

3,000,000.00

4,000,000.00

5,000,000.00

6,000,000.00

7,000,000.00

8,000,000.00

9,000,000.00

10,000,000.00

0 100 200 300 400 500 600 700

Cost

Quantity

Revenue

Fixed Cost

Variable Cost

Total Cost

Average Fixed Cost


Average Total Cost

Marginal Cost

Marginal Revenue


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A. Snapshot of Cost & Revenue Curve

0.00

3,000.00

6,000.00

9,000.00

12,000.00

15,000.00

18,000.00

21,000.00

24,000.00

27,000.00

30,000.00

0 100 200 300 400 500 600 700

Cost & Revenue

Quantity

Average Fixed Cost


Average Total Cost

Marginal Cost

Marginal Revenue


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rofit Maximization

We all know that in the competitive market the price equal the marginal

cost equal the marginal revenue P = MC = MR

So it will look like that

14000 (price) = 14000 (marginal cost) = 14000 (marginal revenue)

But we are a monopoly so our price and marginal revenue most be

greater than the marginal cost so that the institution can maximize the

profit and it will be like that

25000 or 22500 (price) > 14000 (marginal cost) = 25000 or 22500

(marginal revenue)


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How much profit does the institution make?

To see the institution's profit, recall that profit equals total revenue (TR)

minus total costs (TC): we will take the quantity 140 as an averagequantity to talk about

Profit = TRTC = 3,500,000.00 - 2,440,000.00 = 1,060,000.00


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12,000.00

17,000.00

22,000.00

27,000.00

0 100 200 300 400 500 600 700 800

Cost &

Revenue

Quantity

Profit Maximization

Demand

Marginal Revenue

Marginal Cost

Average Total Cost

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