If a college admits only a fixed number of applicants every year, then the school’s supply curve for admissions is: A. Perfectly elastic B. Perfectly inelastic C. Quite flat D. Downward-sloping
The correct answer and explanation is:
Correct Answer: B. Perfectly inelastic
A perfectly inelastic supply curve represents a situation where the quantity supplied does not change regardless of changes in price or demand. This applies directly to a college that admits only a fixed number of applicants every year. The quantity of admissions remains constant even if more students apply or if the applicants are willing to pay higher tuition. The college sets a strict enrollment cap and does not alter it in response to market signals.
The vertical nature of a perfectly inelastic supply curve means the school has a set number of available seats and does not have the capacity or willingness to increase this number in the short term. Factors such as faculty availability, classroom space, dormitory capacity, and institutional goals often contribute to this rigidity. Institutions may also prioritize selectivity and educational quality over revenue maximization, further reinforcing a fixed admission policy.
For example, if a college decides to admit only 2,000 students annually, that number stays the same even if 10,000 highly qualified students apply. Tuition could double, yet the school might still maintain the same cap due to limited infrastructure and a commitment to maintaining small class sizes or faculty-student ratios.
This is in contrast to a perfectly elastic supply curve, which would reflect an ability to admit an unlimited number of students at a fixed price, a scenario unlikely in most higher education institutions. A flat or downward-sloping supply curve also does not reflect the fixed nature of college admissions.
In conclusion, when a college admits a set number of students regardless of demand or tuition levels, the supply of admissions is perfectly inelastic, depicted by a vertical supply curve.