Answer to Question #71429 in Microeconomics for Raed

Question

2. In 2006, the fees at community colleges will fall from $26 to $24 per unit. Is the demand for community college courses relatively elastic or relatively inelastic? Use the three factors to explain why. Based on your answer, what will happen to the revenues of community colleges?

Answer 1

I think demand of community collage is more inelastic, because 1) education in community college not consider as luxury 2) community college consumer small portion of your budget compare to other colleges 3) demand of cheaper community college consider as inferior good as demand fall when income rises.
Revenue of community college will decline by decreasing price