Asked by Mohamed Araye on May 11, 2024
Verified
The state legislature has cut Gigantic State University's appropriations. GSU's Board of Regents decides to increase tuition and fees to compensate for the loss of revenue. The board is assuming that the
A) demand for education at GSU is elastic.
B) demand for education at GSU is inelastic.
C) coefficient of price elasticity of demand for education at GSU is unity.
D) coefficient of price elasticity of demand for education at GSU is greater than unity.
Appropriations
Funds that are set aside by a governing body, like a legislature, for a specific use or purpose as part of a budget or spending bill.
Tuition
The fee for instruction, especially for higher education institutions.
- Recognize the practical implications of price elasticity of demand in real-world scenarios.
- Evaluate the assumptions behind price elasticity predictions, particularly in terms of higher education demand.
Verified Answer
BA
Bhavesh AroraMay 15, 2024
Final Answer :
B
Explanation :
The board's decision to increase tuition and fees implies they believe that the quantity demanded for education at GSU will not decrease significantly in response to the price increase, indicating an assumption of inelastic demand.
Learning Objectives
- Recognize the practical implications of price elasticity of demand in real-world scenarios.
- Evaluate the assumptions behind price elasticity predictions, particularly in terms of higher education demand.