North Carolina State University recently raised its tuition by 12%. A survey was then conducted to determine how many students would transfer to another university as a result. It was found that only about 1 in 300 responses indicated they would transfer. Based on this information, the price elasticity of demand for education at this university is:
A)1.
B)highly elastic.
C)highly inelastic.
D)0.

Question

Quizplus · Accepted Answer

The very low percentage of students indicating they would transfer despite the substantial tuition increase suggests a highly inelastic demand for education at this university. Inelastic demand means that changes in price have minimal impact on the quantity demanded of a product or service. Therefore, the price elasticity of demand for education at this university is highly inelastic.

North Carolina State University Recently Raised Its Tuition by 12