If Stimpson University increases tuition in order to increase its revenue, it will:
a. be successful if demand is elastic.
c. be successful if demand is inelastic.
d. be successful if supply is elastic.

If Stimpson University increases tuition and the demand for its services is elastic, students may be deterred by the higher prices and choose to attend other institutions, resulting in a decrease in total revenue. When demand is inelastic, however, students are less sensitive to price changes, allowing the university to raise tuition without significantly losing enrollments, thereby increasing total revenue. So, in this case, relying on inelastic demand is key for financial success!

One common mistake universities make when considering tuition hikes is failing to understand the long-term impact on enrollment. They might assume that current students will always come back, but if tuition becomes prohibitively high, it can deter future applicants, leading to a decline in reputation and overall funding. Knowing the elasticity of demand for the programs offered can guide a more sustainable pricing strategy.