In a study commissioned by the College, consultants estimate that an increase in the comprehensive fee from $19,550 to $20,500 would cause the number of returning students to drop by 2%. Also, it would reduce applications for next year's class from 1600 to 1460.

a) Estimate and interpret the price elasticity of demand by the returning students.

b) Estimate and interpret the price elasticity of demand by applicants.

c) Comparing these elasticities, do they seem reasonable? Explain.

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