A few years ago, HIU decreased the (advertised) tuition rate for its MBA program from $21,000/student to $13,000/student. Within two years, the number of students enrolled in the program increased from 150 to 400. a.) Use these values to calculate the price elasticity of demand for HIU’s MBA program. b.) What was HIU’s revenue from the MBA program before and after this price change? c.) What else needs to be considered to determine whether this price change had a positive or negative impact on HIU’s budget (or ‘bottom line’)? Under what condition would this price change have a negative impact on HIU’s budget?
A few years ago, HIU decreased the (advertised) tuition rate for its MBA program from $21,000/student to $13,000/student. Within two years, the number of students enrolled in the program increased from 150 to 400. a.) Use these values to calculate the price elasticity of demand for HIU’s MBA program. b.) What was HIU’s revenue from the MBA program before and after this price change? c.) What else needs to be considered to determine whether this price change had a positive or negative impact on HIU’s budget (or ‘bottom line’)? Under what condition would this price change have a negative impact on HIU’s budget?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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- A few years ago, HIU decreased the (advertised) tuition rate for its MBA program from $21,000/student to $13,000/student. Within two years, the number of students enrolled in the program increased from 150 to 400.
a.) Use these values to calculate the
b.) What was HIU’s revenue from the MBA program before and after this price change?
c.) What else needs to be considered to determine whether this price change had a positive or negative impact on HIU’s budget (or ‘bottom line’)? Under what condition would this price change have a negative impact on HIU’s budget?
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