Question

Part Three: Neighboring WSU dropped their tuition and fees by 14 percent and TTA saw enrollment fall from 8,400 to 7,400. What is the cross elasticity between the two schools.?

Answer 1

0.85

Step-by-step explanation:

Given that

Dropped percentage of tuition and fees = 14%

Enrollment fall from 8,400 to 7,400

So, the cross elasticity between the two schools is

= Percentage change in quantity demanded of one good ÷ Percentage change in price of another good

where,

Percentage change in quantity demanded of one good equals to

= ($7,400 - $8,400) ÷ ($8,400)

= -11.9%

And, the percentage change in price of another good is -14%

So, the cross elasticity is

= -11.9% ÷ -14%

= 0.85