The state legislature has cut Gigantic State University's appropriations. GSU's Board of Regents decides to increase tuition and fees to compensate for the loss of revenue. The board is assuming that the
A)demand for education at GSU is elastic.
B)demand for education at GSU is inelastic.
C)coefficient of price elasticity of demand for education at GSU is unity.
D)coefficient of price elasticity of demand for education at GSU is greater than unity.

Question

Quizplus · Accepted Answer

The board's decision to increase tuition and fees implies they believe that the quantity demanded for education at GSU will not decrease significantly in response to the price increase, indicating an assumption of inelastic demand.

The State Legislature Has Cut Gigantic State University's Appropriations