Question

if stimpson university increases tuition in order to increase its revenue, it will:
a. not be successful if the demand curve slopes downward.
b. be successful if demand is elastic.
c. be successful if supply is elastic.
d. be successful if demand is inelastic.

Explanation:

Total revenue changes depend on price elasticity of demand. When demand is inelastic, a price increase leads to a smaller percentage decrease in quantity demanded, so total revenue (price × quantity) rises. Downward-sloping demand doesn't inherently prevent revenue growth (it depends on elasticity). Elastic demand means a price hike causes a larger quantity drop, reducing revenue. Supply elasticity is irrelevant here, as revenue depends on demand response to price.

Answer:

d. be successful if demand is inelastic.