A Recent Study on Enrollment at a Liberal Arts College

question 2

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 generate more revenue.

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Definitions:

Food

Any nutritious substance that people or animals eat or drink in order to maintain life and growth.

Budget Constraint

A concept in economics that represents all the combinations of goods and services a consumer can afford given their income level and the prices of goods.

Good X

Good X typically represents a hypothetical product used in economic models and problems to explain various concepts.

Good Y

Refers to a specific product or commodity in an economic model or discussion, distinct from others by its characteristics or use case.