Question

Part One: Show your work - At Tumbleweed Tech Academy (because of budget restraints) the school was forced to raise tuition and fees from $1,000 to $1,600 per quarter. As a result of the result of the increased cost, enroll fell from 8,200 to 8,000. What is the price elasticity of demand?

Answer 1

The price elasticity of demand is 0.04

Step-by-step explanation:

Price elasticity of demand = percentage change in enroll ÷ percentage change in tuition and fees

Percentage change in enroll = (8200-8000)/8200 × 100 = 2.44%

Percentage change in tuition and fees = ($1600-$1000)/$1000 × 100 = 60%

Price elasticity of demand = 2.44% ÷ 60% = 0.04