1) Using the factors that influence the price elasticity of demand, do you think going to college is an elastic or inelastic good?
2) State the factors and then support your answer. (You should provide more than one factor.)
3) Often times when a college has over crowded parking, they raise the price of parking permits to lessen the problem. Does this policy work? Explain why or why not using supply and demand and/or elasticity.
HINTS:
1) Consider the factors such as type of good, number of substitutes, and portion of income as it relates to attending college and college parking. Do not use time horizon, this is only used when comparing elasticity of a good at two different points in time. This question is asking about demand for college and parking at a single point in time, how buyers react today to a change in price.
2) Are buyers highly responsive to a change in the price of college and/or parking or not and why?
3) Make sure you provide AT LEAST TWO factors that support your answer for each part. (Two factors on the elasticity of college and two factors for the elasticity of parking on campus.)
