A private school is considering increasing its tuition to raise revenue.If the school believes that raising tuition will increase revenue,
A)it is assuming that the demand for attending the school is inelastic.
B)it is assuming that the demand for attending the school is elastic.
C)it is assuming that the demand for attending the school is unit-elastic.
D)it is assuming that the demand for attending the school is perfectly elastic.

Question

Quizplus · Accepted Answer

If the private school is considering increasing its tuition to raise revenue, it is assuming that the demand for attending the school is inelastic. Inelastic demand means that even when the price (tuition) increases, the quantity demanded of the school's services will not decrease significantly. In other words, parents and students are willing to pay the higher tuition fees to attend the school.

A Private School Is Considering Increasing Its Tuition to Raise