A Recent Study on Enrollment at a Liberal Arts College

question 158

Multiple Choice

A recent study on enrollment at a liberal arts college concluded that demand elasticity is 0.91.The administration is considering a tuition increase to help balance the budget.The revenue-maximizing decision is to

• A)decrease tuition, which should boost enrollment enough to balance the budget.
• B)decrease tuition, which would bring in more revenue.
• C)leave tuition as is-an increase would not help balance the budget.
• D)increase tuition, which would bring in more revenue.

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Definitions:

Promising

Showing signs of future success or positive outcomes; indicative of potential or likelihood to achieve something desirable.

Satisficer

An individual who makes decisions that are good enough under the circumstances, rather than striving for the optimal solution.

Mainstream Economic Models

Widely accepted theoretical frameworks used to analyze and predict economic phenomena, typically based on assumptions of rational behavior and market equilibrium.

Decision Making

The process of identifying and choosing alternatives based on the values, preferences, and beliefs of the decision-maker.