Economics Issues in Non-Public Schools Literature Review

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[. . .] This marketing strategy will reduce their operational cost and it is termed as marketing economies.

According to Blaug (2007, 347-349).non-public schools are well reputed for paying their teaching staff high amount of salaries, this means that they are able to take care of the social welfare of their employees, which leads to motivation, high output in terms of performance and low cost of organizing labor. Consequently non-public schools are able to enjoy the staff welfare economies. Apart from these internal economies of scale, there are also other external economies of scale that accrue to non-public schools like creation of employment, availability of infrastructure, the ease of getting skilled manpower and wide market available.

However, it is important to note that as these non-public schools are increasingly absorbing many students who come with a lot of expectation of which they have paid for, the total coat of operations in such schools are also likely to increase. This results to disadvantages of large scale production.

One of the disadvantages of large scale of production for non-public schools is the organization of problems, as this schools come increasingly popular they employee a lot of teachers in order to reduce the student-teacher ratio and this result to congestion in the workforce and hence difficulties arise in organizing labor leading to an increase in the cost of production.

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Bureaucracy is also another disadvantage associated with non-public schools, since the decision making process follows a long chain of command as many people have to be consulted hence leads to time wasting which increases the cost of operation.

Relationship between economies of scale and a non-public schools' cost of operation

Literature Review on Economics Issues in Non-Public Schools Assignment

Eckersley (1992, 238-242) noted in his studies that a prudent business man will always aspire to reduce cost and increase revenue. Total costs are made up of fixed and variable cost, while total revenue is tuition fee per student multiplied by the number of students enrolled. Fixed costs do not increase with output but variable cost increase with output, the higher the level of output the lower the cost of operation up to a certain point of output.

As output increases cost per student goes down more so because fixed cost do not rise with output, for as long as cost per student is falling the non-public schools will enjoy economies of scale, however it gets to a level of production optimum level of output, should the institution increase output beyond optimum, the diseconomies of scale would set in (Bowers, 1997, 345-349).

Demand and supply

In the non-public schools the issue of supply and demand arises in respect to teachers and students. Demand will be in terms of students who want to get admission and the supply of students who want to enroll. The supply of teachers in the labor market also matters and the demand which either the school has on teachers or vice versa.

Factors influencing the demand of public schools include; the salaries they offer to teachers and the tuition fee they charge on students. As the salaries of teachers increases the more the demand will be for teachers who want to work for these non-public schools, on the other hand if the tuition fees increase the demand will fall for students who want to enroll in these schools. As the level of salaries fall so does the demand for teachers who are willing to work there, if the tuition fee reduces many learners will be attracted even from public school to go to non-public schools.

The other factor affecting demand in non-public schools is the consumer individual income. Lazear (2000, 99-146) pointed out that as one income rises more of the goods are demanded and as income level declines the less of the goods will be demanded. Thus the demand of the prestigious non-public school education will increase if the national income level also increases i.e. The income level of nationals, more parents will find it affordable to take their children to non-public schools that are a bit expensive than the public schools.

In economics the price of closely related goods will affect the demand of other goods; this fact also affects the demand in non-public schools. If public schools are offering lower tuition fees than the non-public schools the demand for non-public school education is set to decline and also if other non-public schools are offering lower tuition fees this will definitely lead to decline in the demand of schools whose tuition fees is a bit high.

The total population of students will also affect the demand in non-public schools, in a scenario where the total student population increases in a country the demand is likely to increase also. The government policies in a country will also affect demand in non-public school; an action such as increase in taxation may reduce demand in these schools while increase in grants and subsidies will increase demand. The economic condition of a country will also affect demand, since in a favorable economic condition the consumer income is also set to increase and hence the demand for non-public school education.

The supply of non-public schools is also an economic issue. This is affected mostly by the government policies. If the policies favor the establishment of non-public school then their supply will increase in the education sector, if the policies are unfavorable the supply is set to stagnate or decline. The economic condition also matters; in situations of harsh economic climate like the recent financial meltdown of 2007 to 2010 the number of these private institutions also declines (Friedman, 1987, 144)

Demand for non-public schools

The graph shows an increase in the demand for non-public schools due to increase in favorable factors.

Demand for non-public school

The graph shows an increase in the demand for non-public schools due to decrease in favorable factors.

Work cited

Aristides, N., 2002. "The Nature of the Firm" European Journal of Law and Economics 14 (3):

Blaug, Mark (2007). "The Social Sciences: Economics," Microeconomics, the New Encyclopedia Britannica, Chicago

Bowers, John. (1997) Sustainability and Environmental Economics: An Alternative Text. Singapore: Addison Wesley Longman

Friedman, David D. (2002). "Crime," The Concise Encyclopedia of Economics'

Friedman, David (1987). "Law and economics," The New Palgrave: a Dictionary of Economics,

.Lazear, Edward P. (2000). "Economic Imperialism," Quarterly Journal Economics

Lipsey, Richard G. And Courant, Paul N (1996) Economics 11th Edition Social and Environmental Regulation, New York: HarperCollins Publishers Inc.

Hodge, Ian. (1995) Environmental Economics New York: St. Martin's Press,

Eckersley, Robyn. (1992) Environmentalism and Political Theory Albany: State University of New York Press,


Source: United States' Department of Education, National Center for Education Statistics.

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