Assume Harvard wants to raise more revenue from tuition. What should Harvard do if the price elasticity of demand for a Harvard education is inelastic?
A) Harvard should raise tuition in order to collect more tuition from each student.
B) Harvard should lower tuition in order to increase the number of students paying tuition.
C) Harvard won't be able to increase revenue from tuition, because any increase in revenues from a higher price would be offset by the loss of students.
D) It depends on the price elasticity of supply at the local community college.

Question

Quizplus · Accepted Answer

If the price elasticity of demand for a Harvard education is inelastic, then a change in tuition would not have a significant impact on the number of students enrolling. Therefore, Harvard could raise tuition in order to collect more revenue from each student without losing a significant number of students.

Assume Harvard Wants to Raise More Revenue from Tuition