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. The following appeared in the editorial section of a campus newspaper.
“Because occupancy rates for campus housing fell during the last academic year, so
did housing revenues. To solve the problem, campus housing officials should
reduce the number of available housing units, thereby increasing the occupancy
rates. Also, to keep students from choosing to live off-campus, housing officials
should lower the rents, thereby increasing demand.”
Discuss how well reasoned... etc.
The author of this article argues that, to reverse declining revenues from campus housing rentals, campus housing officials should
decrease the number of available housing units and reduce rent prices on the units. The author’s line of reasoning is that fewer available
units will limit supply while lower rents will increase demand, thereby improving overall occupancy rates, and that the resulting increase in
occupancy rates will, in turn, boost revenues for the campus. This reasoning is unconvincing for several reasons.
To begin with, the author assumes that boosting occupancy rates will improve revenues. All other factors remaining unchanged, this
would be the case. However, the author proposes reducing both the supply of units and their rental prices. Both of these actions would
tend to reduce revenues. The author provides no evidence that the revenue-enhancing effect of a higher occupancy rate will exceed the
revenue-decreasing effect of reduced supply and price. Without such evidence, the argument is unconvincing.
Secondly, the author assumes that lowering rents will lead to higher revenues by increasing demand. However, it is possible that demand
would decrease, depending on the extent of the rent reduction as well as other factors—such as overall enrollment and the supply and
relative cost of off-campus housing. Moreover, even if demand increases by lowering rents, revenues will not necessarily increase as a
result. Other factors, such as maintenance and other costs of providing campus housing units and the reduced supply of rental units
might contribute to a net decrease in revenue.
Thirdly, in asserting that lowering rental rates will increase demand, the author assumes that current rental rates are causing low
demand. However, low demand for student housing could be a function of other factors. For instance, the student housing units may be
old and poorly maintained. Perhaps students find the campus housing rules oppressive, and therefore prefer to live off-campus; or
perhaps enrollments are down generally, affecting campus housing occupancy.
In conclusion, the author of this editorial has not argued effectively for a decrease in the number of available campus housing units and
a reduction in rental rates for those units. To strengthen the argument, the author must show that a rent reduction will actually increase
demand, and that the revenue-enhancing effect of greater demand will outweigh the revenue-reducing effect of a smaller supply and of
lower rental rates.