The university hopes to raise more revenue by increasing student housing fees. This plan will work only if:
A)the percent rise in price is larger in magnitude than the percent decline in quantity demanded.
B)the percent rise in price is smaller in magnitude than the percent decline in quantity demanded.
C)the percent decrease in price is smaller in magnitude than the percent decline in quantity demanded.
D)the percent decrease in price is larger in magnitude than the percent increase in quantity demanded.

Question

Quizplus · Accepted Answer

For the university to raise more revenue by increasing student housing fees, the price elasticity of demand must be inelastic. This means the percentage increase in price must be larger than the percentage decrease in quantity demanded, ensuring total revenue increases despite a decrease in quantity demanded.

The University Hopes to Raise More Revenue by Increasing Student