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m7hwk_shang.pdf - 1` AFRE 805, Module 7, Homework...

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1`AFRE 805, Module 7,HomeworkElasticities, Consumer Surplus and CompensatingVariation NS C5, p 159-162, 166-1701.Hemelt and Marcotte (2011) estimate demand for public university undergraduate enrollment. The datafor demand quantity arestudents enrolled at a university. Price is annual tuition cost per student. Averagetuition is5,730per year (2021 price level) and average enrollment is about 11,000 undergraduate students.The estimated own-price elasticity is -.1 The researchers evaluate a 10% tuition price increase.(a)Evaluate the effects of 10% tuition price increase on average enrollment. What is the change inenrollment?How many students remain enrolled and how many drop out?
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