⦁ Imagine that tuition for your schooling has increased by 20%. How do you think this will affect demand and consumer behavior? Why? How would you describe the elasticity of your tuition? Explain. (Describe the elasticity of tuition.)
⦁ Imagine that there are currently 10,000 students enrolled at your institution. The school decides to increase tuition, and enrollment falls to 9,000. Tuition started at K4, 000 per term but has since gone up to K4, 800. What is the elasticity of demand? (Explain how an increase in tuition will impact demand and consumer behavior. Solve for the elasticity of demand)
⦁ How will this impact total revenue for your institution? What inferences can you make from this information? (Explain the impact of the tuition increase on total revenue)
QUESTION 2 (10marks)
A key skill in economics is the ability to use the theory of supply and demand to analyze specific markets.
Scenario 1: Suppose that, as part of an international trade agreement, the Zambian government reduces the tariff on imported fish. Will this affect the supply or the demand for Fish? Why? Which determinant of demand or supply is being affected? Show graphically with before- and after-curves on the same axes. How will this change the equilibrium price and quantity of Fish? Explain your reasoning.
Scenario 2: Suppose the Ministry of health publishes a study finding that Fish reduces the probability of getting Corona Virus. How do you imagine this will affect the market for Fish? Why? Which determinant of demand or supply is being affected? Show graphically with before- and after-curves on the same axes. How will this change the equilibrium price and quantity of Fish? Explain your reasoning.
Answers
Answer:
* If the tuition for schooling increased by 20%, the demand and consumer behavior will be affected and will have changes. The demand for enrollment will decrease, and probably consumer behavior will change too. The elasticity of my tuition became more elastic because the price of my tuition increased.
Explanation:
I can answer 1 question only, sorry.
If school tuition increases by 20%, demand and consumer behavior will be influenced and will alter. Enrollment demand will fall, and customer behavior will most likely shift as well. When the price of my tuition grew, the elasticity of my tuition got more elastic.
A price rise will thus increase overall income, whilst a price drop will lower total revenue. Lastly, demand is said to be unit elastic when the percentage change in quantity sought is equal to the percentage change in price. If demand is elastic at a particular price level, the corporation should lower its pricing since a percentage decrease in price will result in an even higher percentage gain in quantity sold, hence increasing overall revenue. In principle, if a product has elastic demand in the market, a business can raise its revenue by dropping its price, where the price declines at a lower rate and the quantity grows at a greater rate, resulting in an increase in total revenue.
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