Suppose an analysis of the possible effects of increases in university tuition fees predicts that a 10% increase in tuition fees will result in a 3% decline in enrolment.What is the implied price elasticity of demand for university attendance?
A)10
B)7
C)0
D)0.3
E)3

Question

Quizplus · Accepted Answer

The price elasticity of demand measures the percentage change in quantity demanded divided by the percentage change in price. In this case, the percentage change in quantity demanded is -3%/10% = -0.3, which implies that for every 1% increase in tuition fees, there is a 0.3% decrease in enrolment. Therefore, the implied price elasticity of demand is 0.3.

Suppose an Analysis of the Possible Effects of Increases in University