Answer to Question #171850 in Microeconomics for Makombe Chilonge

Question

A.   Imagine that tuition for your schooling has increased by 20%. How do you think this will affect demand and consumer behavior? Why? How would you describe the elasticity of your tuition? Explain. (Describe the elasticity of tuition.)

B.     Imagine that there are currently 10,000 students enrolled at your institution. The school decides to increase tuition, and enrollment falls to 9,000. Tuition started at K4, 000 per term but has since gone up to K4, 800. What is the elasticity of demand? (Explain how an increase in tuition will impact demand and consumer behavior. Solve for the elasticity of demand)

C.    How will this impact total revenue for your institution? What inferences can you make from this information? (Explain the impact of the tuition increase on total revenue)

Answer 1

A.If the tuition for schooling increased by 20%, the demand and consumer behaviour will be affected and will have changes. The demand for enrollment will decrease, and probably consumer behaviour will change too. The elasticity of my tuition became more elastic because the price of my tuition increased.

B. change in quantity demanded/change in price=1000 students/800

ED=1.25

C. there will be an increase in revenue even with the decrease in the student population.