Question

"The president of a college has been told that when they raised their tuition by 15 percent the previous year, total revenue from tuition remained unchanged. Assuming the change in revenue is due to the change in tuition only, the president could conclude that demand for that college, over that tuition range, must be:"
A. equal to zero.B. elastic.C. equal to -1.D. inelastic.

Answer 1

Answer:

The answer is: D) inelastic

Explanation:

Price elasticity of demand (PED) measures how much the quantity demanded of a product or service will change if the price of the product or service changes.

It is determined by the following formula:

• PED = % change in quantity demanded / % change in Price

If the PED > 1, the product is considered elastic, a change in its price will cause a larger proportional change in its quantity demanded.

If the PED < 1, the product is considered inelastic, a change in its price will cause a smaller proportional change in its quantity demanded.

In this case, the PED = 0 (= 0% / 15%), so it is completely inelastic.