10. Washburn University increased tuition 3o/o in order to have more revenue to
ID: 1253606 • Letter: 1
Question
10. Washburn University increased tuition 3o/o in order to have more revenue to cover its increasing costs. Answer the following questions on the impact the tuition increase will have on washburn's revenue (You may use the back of this page if you need more space)a. Briefly explain why the price elasticity of demand for a Washburn education influences the tuition increase's impact on the university's revenue.
b.Briefly explain why the price elasticity of demand for a Washburn education may be more elastic over the long-term versus the short term.
c. Briefly explain why the tuition increase's impact on universit5r revenue would be
different if Washburn's 3o4 increase coincided with a 3olo increase at all other universities versus if Washburn's 3%o increase coincided with other universities keeping their tuitionunchanged.
Explanation / Answer
a) Price elasticity is pretty much a measure of how much consumers respond to a price change. If the price elasticity is positive it means that consumers are more sensitive to changes in price. If the price increases, demand will drop. A negative price elasticity means that consumer demand won't change much no matter what the change in cost. So if the price elasticity at the University is positive, it means that raising the prices might cause less people to choose the university therefore causing a possible drop in revenue. If however, the price elasticity is negative, the amount of people attending will stay about the same therefore increasing their revenue b) It may be more elastic over time because there will more universities opening up. People will realize that this university provides the same education as others but at a higher cost. However, in the short run those who already registered are already stuck there & the people coming into the university won't have an opportunity to switch universities c) sorry i have no idea what 3o4 means xD
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