Describe the elasticity of supply for college education. What effect does this have on price and quantity as demand for college increases?
Please provide the best answer for the statement.
The elasticity of supply is inelastic, it is difficult for colleges to change the “number of seats” available. It takes time to build new student housing buildings or expand existing ones. It also requires time to hire new faculty members to teach the additional students. These constraints make it difficult for college to change the quantity of education supplied.
When the demand for a college education increases, the in elasticity of education means there is an increase in the price of the educations, but the quantity remains fairly constant. This can be seen in the price of college tuition since the 1980.
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Suppose the government wants to spend more. There is no unemployment. Which of the following would be the least inflationary?
A. Increase government expenditures and sell bonds to the Federal Reserve. B. Increase government expenditures and taxes at the same time. C. Increase government expenditures and reduce taxes. D. Increase government expenditures and use money already in the Treasury to finance these expenditures.