Would you expect the price elasticity of demand to be higher at the level of an individual school or...

Question

Would you expect the price elasticity of demand to be higher at the level of an individual school or at the aggregate level (e.g., all 4-year colleges and universities)? Why?
Despite the empirical evidence to the contrary, college decision-makers often believe that their price elasticity of demand is essentially zero. Is that right? How important were price considerations in making your college decision? Would a change of a few thousand dollars have mattered?
Would you expect the price elasticity of demand to be higher for financial-aid students or for non-aid students? Why? 
How does a student’s income elasticity affect the demand for higher education at College?

Robert · Accepted Answer

Elasticity of demand for education, measures the change in demand for education when there is a change in the price of education. Empirical data shows that elasticity is found to be low; demand is inelastic, although it is difficult to give one number to elasticity as each study is specific to the data it uses.. The college decision makers are right to say that elasticity is zero- as there is no substitute to their college. They may be right in their view as there is no substitute to a specific college in terms of the combination of teachers, facilities and financial aid that it offers. If there are no substitutes available, then elasticity of demand for a college is zero in an economic sense.
Price of education is one of the factors that determines a choice of...

Would you expect the price elasticity of demand to be higher at the level of an individual school or at the aggregate level (e.g., all 4-year colleges and universities)? Why? Despite the empirical...

Solution

Answer To This Question Is Available To Download

Related Questions & Answers

Submit New Assignment