Questions: Question 34 (2 points) Gigantic State University raises tuition for the purpose of increasing its revenue so that more faculty can be hired. GSU is assuming that the demand for education at GSU is: 1) decreasing. 2) perfectly elastic. 3) relatively inelastic. 4) relatively elastic. Question 35 (2 points) If the University Chamber Music Society decides to raise ticket prices to provide more funds to finance concerts, the Society is assuming that the demand for tickets is: 1) inelastic. 2) shifting to the left.

The answer to Question 34 is the third one (3): relatively inelastic.

Explanation for Question 34:

1. Decreasing: If the demand were decreasing, raising tuition would likely lead to a decrease in revenue, as fewer students would be willing to pay the higher price.
2. Perfectly elastic: If demand were perfectly elastic, any increase in tuition would cause the quantity demanded to drop to zero, resulting in no revenue.
3. Relatively inelastic: When demand is relatively inelastic, consumers are less sensitive to price changes. Therefore, raising tuition would lead to a smaller percentage decrease in the quantity demanded, allowing the university to increase its revenue.
4. Relatively elastic: If demand were relatively elastic, a price increase would lead to a larger percentage decrease in the quantity demanded, potentially reducing revenue.

The answer to Question 35 is the first one (1): inelastic.

Explanation for Question 35:

1. Inelastic: If the demand for tickets is inelastic, consumers are less sensitive to price changes, meaning that raising ticket prices would likely lead to an increase in total revenue.
2. Shifting to the left: A leftward shift in demand would indicate a decrease in demand at all price levels, which is not directly related to the effect of raising prices on revenue.

In summary, both scenarios assume that the demand is inelastic, allowing the institutions to increase revenue by raising prices.