Suppose a University Raises Its Tuition by 6 Percent and as a Result

question 35

Multiple Choice

Suppose a university raises its tuition by 6 percent and as a result the enrollment of students decreases by 3 percent.The absolute value of the price elasticity of demand is

• A)0.5.
• B)2.0.
• C)8.0.
• D)6.0.

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Definitions:

Perfectly Competitive Firm

A company that operates in a market where there are many buyers and sellers, all selling homogeneous products, with no single party having market control.

Perfectly Competitive Market

A market structure where many firms offer an identical product, and no single supplier can influence the market price.

Control Over Price

The ability of a company or entity to dictate the price at which they sell their products or services, often due to lack of competition.

Perfectly Competitive Firms

Companies that operate in a market where no single buyer or seller has market power, and all goods are identical.