What are the various kinds of demand elasticity?

Need some help with price elasticity of demand?

• I do not understand price elasticity of demand; therefore I am having difficulty answering these questions. Would you expect the price elasticity of demand to be higher at the level of an individual school (e.g., Baker) or at the aggregate level (e.g., all 4-year colleges and universities)? Why? (my answer so far)I believe the price elasticity of demand would be higher at the aggregate level of education. The price elasticity of demand for a university is more elastic than Baker, because people can switch to Baker if the price of the university goes up. (Baker is relatively cheaper than a regular four year college) Despite the empirical evidence to the contrary, college decision-makers often believe that their price elasticity of demand is essentially zero. Is that right? How important were price considerations in making your college decision? Would a change of a few thousand dollars have mattered?(my answer, I can answer second part on own and think third one) No, college price elasticity of demand I believe could not be zero. (all I have thus far, not sure as to why) Would you expect the price elasticity of demand to be higher for financial-aid students or for non-aid students? Why? (my answer) I think that it would be higher for non aid students (not sure though) How does a student’s income elasticity affect the demand for higher education at Baker College? (i don't know about this one) Please help and steer me in the right direction please...

• Answer:

  I think your first answer is backwards (at least the first sentence), your second sentence I believe is correct. The more specific a good is, the higher the price elasticity of demand will be (more elastic). Hmmm, college officials believe that the price elasticity of demand is perfectly inelastic (0). This is impossible (generally only medicine or food if you are poor is very inelastic). No, people can go to technical school or just get a job. I think it would be higher for financial aid students because the expense represents a higher portion of their income, although I may be thinking about it backwards, double check your text to see how this plays a role. Basically, the more income someone has, the more likely they are to go to Baker (positive income elasticity of demand hopefully). Unless there is a more prestigious/expensive school with the same enrollment requirements as Baker, then the IEoD could be negative :(