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1 August, 08:13

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.?

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  1. 1 August, 10:12
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    0.85

    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
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