Question

Which of the following best explains the significant increases in the equilibrium prices for higher education in the United States since the 1980s? The supply of higher education is highly price elastic, and demand has increased substantially. The demand for higher education is highly price inelastic, and the supply has decreased substantially. The demand for higher education is highly price elastic, and the supply has decreased substantially. The supply of higher education is highly price inelastic, and demand has increased substantially.

Answer 1

Answer: The supply of higher education is highly price inelastic and demand has increased substantially.

Step-by-step explanation:

The option that best explains the significant increases in the equilibrium prices for higher education in the United States since the 1980s is that the supply of higher education is highly price inelastic and demand has increased substantially.

Price inelastic means that a change in price has little effect on the demand for education and since there has been an increase in the demand for education, the suppliers will increase the price which led to the increase in equilibrium price.