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# A college raises its annual tuition from \$28,000 to \$30,000 and its

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A college raises its annual tuition from \$28,000 to \$30,000
and its student enrollment falls from 4,877 to 4,715.
Compute the price elasticity of demand. Is demand elastic
or inelastic? Explain and show your work.
Solution
Price Elasticity of Demand = % Change in Quantity
Demanded / % Change in Price
Change in Quantity Demanded = 4,877 - 4,715 = 162
% Change = 162 / 4877 = 3.32%
% Change in Price = 2,000 / 28,000 = 7.14%
Price Elasticity of Demand = 3.32 / 7.14 = 0.46
Demand is Inelastic because the change in Demand is less
than 1. It means change in demand is less as compared to
price change.

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A college raises its annual tuition from \$28,000 to \$30,000 and its student enrollment falls from 4,877 to 4,715. Compute the price elasticity of demand. Is demand elastic or inelastic? Explain and show your work. Solution Price Elasticity of Demand = % Change in Quantity Demanded / % Change in Pr ...
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