Assume State University increases its annual tuition from $24,500 in 2019 to $29,500 in 2020. Freshmen enrollment falls from 1,500 to 1,300, ceteris paribus. Use the arc elasticity formula to calculate the coefficient of price elasticity.
Is the demand for places in State University’s freshman class elastic, inelastic or of unitary price elasticity?
Does State University tuition revenue from the freshman class rise or fall in 2020 compared with revenue earned in 2019?
A bus system in Pennsylvania increases its bus fares. A story in the local newspaper reported that, "Ridership fell 15 percent in 2018 after a 33 percent increase in bus fares."
Based on this information, is the demand for bus fares elastic or inelastic? Explain your answer.
Using the determinants of price elasticity, explain why your answer in part b (1) is a reasonable answer.
Are the cross-price elasticities of demand between the following pairs of products likely to be positive or negative? Briefly explain your answer.
French fries and ketchup
Hamburger and chicken
Pepsi and Coca Cola
Pens and paper