PRINCIPLES OF MARKETING
Pre-work 2
1. Interestingly, there are some markets that are counter-cyclical to economic activity. One
such is education. At times of economic downturn, the demand for higher education can
actually increase, What is in your opinion the explanation for that inverse relationship?
I’ve been looking for information and reading about it and it is proven that during the Great Recession
students were more likely to enroll in college and were more likely to stay in college. The demand for
higher education has increased in every recession since the 1960s. What happens is that the
opportunity cost of going to college drops very dramatically during recessions. It is harder to find a job,
to keep a job or to get a promotion. Therefore, some people who would not enroll do enroll. People
who would drop out stay enrolled. And people who would have taken some time off between
undergraduate and graduate school decide to go straight to graduate school.
Personally, I think that even though families may find it more painful to pay for college during a
recession because their incomes and home values are stagnant or falling, they do pay for college.
This is the sense in which higher education is a counter-cyclical industry. Because demand for
education goes up, they can expand enrollment or raise tuition to make up for losses elsewhere.
2. How would your approach to buying a computer differ from your parents’ approach? What
about buying an outfit to wear to a party? How can firms use their knowledge of different age
