Question

The California State University System has raised its fees by 10%. Would the demand for these universities (such as San Diego State University or CSU – San Marcos) be relative elastic or inelastic? Use the three factors to explain why.

Answer 1

If the California State University System wanted to increase its revenue and has raised its fees by 10%, then the demand for these universities (such as San Diego State University or CSU – San Marcos) would be relative inelastic, because in this case quantity demanded is less sensitive to changes in price.