A university raises annual tuition by 10 percent. No other events have occurred, and the university's revenues have increased. It must be true that
A) the associated change in quantity demanded was smaller than 10 percent.
B) the associated change in quantity demanded was equal to 10 percent.
C) the associated change in quantity demanded was greater than 10 percent.
D) there was no associated change in quantity demanded.

Question

Quizplus · Accepted Answer

The increase in revenue despite the tuition hike indicates that the decrease in quantity demanded was less than the percentage increase in price, meaning demand is inelastic.

A University Raises Annual Tuition by 10 Percent