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31. Get Smart University is contemplating increasing tuition to increase revenue. What must the school believe? a. The law of demand does not apply. b. The demand for university education is elastic. c. The demand for university education is inelastic. d. The supply of university education is elastic.

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Beverley Smith
Beverley SmithLv2
7 Jan 2018
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Related questions

In a study published in 1980, B. B. Gibson estimated the following price and income elasticities of demand for six types of public goods:

State Activity Price Income
Elasticity Elasticity
Aid to needy people - 0.83 0.26
Pollution control - 0.99 0.77
Colleges and universities - 0.87 0.92
Elementary school aid - 1.16 1.14
Parks and recreational areas - 1.02 1.06
Highway construction and - 1.09 0.99
maintenance

(a) Do these public goods conform to the law of demand? For which public goods are demand price elastic?

(b) What types of goods are these public goods?

(c) If the price or cost of college and university education increased by 10 percent and, at the same time, incomes also increased by 10 percent, what would be the change in the demand for college and university education?

A study by B.B. Gibson estimated the price and income elasticities of demand for six types of public goods for the U.S. economy. The estimates are given in the following table. Public Goods Aid to needy people Pollution Control Colleges and Universities Elementary School Education Parks and Recreational Areas Highway Construction and Maintenance Price Elasticity -0.83 -0.99 -0.87 -1.16 -1.02 -1.09 Income Elasticity 0.26 0.77 0.92 1.14 1.06 0.99 (a) Do these public goods confirm to the law of demand? (5) (b) For which public goods is the demand price elastic? (5) Page 2 of 3 (c) What would the impact on elementary school education and College and University education of a 20 percent increase in income, keeping other things constant? (5) (d) If the cost of pollution control came down by 10 percent along with a simultaneous increase in income of 20 percent, what would be the change in demand for pollution control? (5)

10. Washburn University increased tuition 3o/o in order to have more revenue to cover its increasing costs. Answer the following questions on the impact the tuition increase will have on Washburn's revenue (You may use the back of this page if you need more space)

a. Briefly explain why the price elasticity of demand for a Washburn education influences the tuition increase's impact on the university's revenue.

b.Briefly explain why the price elasticity of demand for a Washburneducation may be more elastic over the long-term versus the short-term.

c. Briefly explain why the tuition increase's impact on universit5rrevenue would be
different if Washburn's 3o4 increase coincided with a 3olo increase at all other universities versus if Washburn's 3%o increase coincided with other universities keeping their tuition unchanged.

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