Asked by Emanuel Holesome on May 26, 2024
Verified
Gigantic State University raises tuition for the purpose of increasing its revenue so that more faculty can be hired. GSU is assuming that the demand for education at GSU is
A) decreasing.
B) relatively elastic.
C) perfectly elastic.
D) relatively inelastic.
Relatively Inelastic
A situation where the demand for a product does not change significantly with a change in the price.
GSU
An acronym that can refer to Georgia State University or other entities, depending on the context.
- Fathom the influence of elasticity shifts on the gross income of corporations following alterations in prices.
Verified Answer
CG
Calvin Gerald Wilson Sr.May 29, 2024
Final Answer :
D
Explanation :
GSU's assumption that raising tuition will increase revenue implies that they believe the demand for education at their institution is relatively inelastic. This means they expect that the percentage decrease in quantity demanded (enrollment) will be less than the percentage increase in price (tuition), leading to higher overall revenue. Elasticity of demand measures how sensitive the quantity demanded is to a change in price. If demand were elastic, an increase in tuition would lead to a proportionally larger decrease in enrollment, reducing revenue.
Learning Objectives
- Fathom the influence of elasticity shifts on the gross income of corporations following alterations in prices.