Suppose a university raises its tuition by 6 percent and as a result the enrollment of students decreases by 3 percent.The absolute value of the price elasticity of demand is
A)0.5.
B)2.0.
C)8.0.
D)6.0.

Question

Quizplus · Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Here, it is |-3%/6%| = 0.5.

Suppose a University Raises Its Tuition by 6 Percent and as a Result