A decrease in tuition fees decreases the university's total revenue if the price elasticity of demand for university education is
A)negative.
B)greater than zero but less than 1.
C)equal to 1.
D)greater than 1.
E)less than the elasticity of supply.

Question

Quizplus · Accepted Answer

The price elasticity of demand measures how much the quantity demanded of a good responds to a change in the price of that good. If the price elasticity of demand is greater than zero but less than 1 (inelastic), a decrease in price (tuition fees) will lead to a smaller percentage increase in quantity demanded, resulting in a decrease in total revenue.

A Decrease in Tuition Fees Decreases the University's Total Revenue