Question

Is price elasticity of demand at GCU elastic or inelastic? What could you do to find out?

Answer 1

The price elasticity of demand at GCU is elastic. Given the ranking is not high in the US and the easiness of admission; there are a lot of other similar university as substitutes. Students who attend GCU generally spend a large percentage of income in tuition, and the average salary after graduation does not make much difference from high school graduates'. Limited affordability and opportunity cost of switching would also contribute to the elasticity. The easiest approach would be asking students if tuition increases by 1%, would they still be willing to attend GCU. If more than 1% students choose to leave, then price elasticity of demand is elastic at GCU, otherwise inelastic.

Price Elasticity of Demand = % Change in Quantity Demanded / % Change in Price