Figure 6-4
-Facing stiff competition, Hendrix College, a small liberal arts institution in Conway, Ark., decided two years ago to bolster its academic offerings, promising students at least three hands-on experiences outside the classroom, including research, internships and service projects. Although it raised tuition and fees by 29 percent, enrollment in the freshman class rose by 37 percent. Source: Jonathan D. Glater and Alan Finder, "In New Twist on Tuition Game, Popularity Rises With the Price," New York Times, December 12, 2006
Based on the information above, the demand for Hendrix College education is
A) unit-elastic.
B) perfectly elastic.
C) relatively inelastic.
D) More information is needed to answer the question.

Question

Figure 6-4 
-Facing stiff competition, Hendrix College, a small liberal arts institution in Conway, Ark., decided two years ago to bolster its academic offerings, promising students at least three hands-on experiences outside the classroom, including research, internships and service projects. Although it raised tuition and fees by 29 percent, enrollment in the freshman class rose by 37 percent. Source: Jonathan D. Glater and Alan Finder, "In New Twist on Tuition Game, Popularity Rises With the Price," New York Times, December 12, 2006
Based on the information above, the demand for Hendrix College education is
A) unit-elastic. 
B) perfectly elastic. 
C) relatively inelastic. 
D) More information is needed to answer the question.

Quizplus · Accepted Answer

The fact that Hendrix College was able to raise tuition and fees by 29 percent and still increase enrollment in the freshman class by 37 percent suggests that demand for its education is relatively inelastic. This means that students are willing to pay a higher price for a Hendrix education due to its promised three hands-on experiences outside the classroom, suggesting that the school has a unique value proposition. However, without more information on the price elasticity of demand for Hendrix College specifically, we cannot conclusively say that the demand is relatively inelastic.

Figure 6-4 -Facing Stiff Competition, Hendrix College, a Small Liberal Arts Institution