A University System Enrolling Hundreds of Thousands of Students Is

question 32

Short Answer

A university system enrolling hundreds of thousands of students is considering a change in the way students pay for their education. Currently, the students pay $50 per credit hour. The university system administrators are contemplating charging each student a set fee of $7,000 per quarter, regardless of how many credit hours each takes. To see if this proposal would be economically feasible, the administrators would like to know how many credit hours, on the average, each student takes per quarter. A random sample of 250 students yields a mean of 14.1 credit hours per quarter and a standard deviation of 2.3 credit hours per quarter. Suppose the administration wanted to estimate the mean to within 0.1 hours at 95% reliability and assumed that the sample standard deviation provided a good estimate for the population standard deviation. How large a total sample would they need to take?

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Definitions:

Output Units

The quantity of goods or services produced by a company or an economy.

Allocative Inefficiency

Occurs when resources in an economy are not allocated optimally, leading to outcomes where it is possible to improve someone's well-being without worsening others'.

Profit-Maximizing

A strategy or process employed by businesses to determine the price and output level that generates the most profit.

Monopoly

A market structure characterized by (1) a single seller of a well-defined product for which there are no good substitutes and (2) high barriers to the entry of any other firms into the market for that product.