A Recent Study on Enrollment at a Liberal Arts College

question 125

Multiple Choice

A recent study on enrollment at a liberal arts college concluded that demand elasticity is 0.65. The administration is considering a tuition increase to help balance the budget. The revenue-maximizing decision is to

• A) decrease tuition, which should boost enrollment enough to balance the budget.
• B) decrease tuition, which would bring in more revenue.
• C) leave tuition as is-an increase would not help balance the budget.
• D) increase tuition, which would generate more revenue.

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Definitions:

Conversion Costs

Expenses related to transforming raw materials into finished products, encompassing both labor efforts and overhead charges.

Manufacturing Overhead Cost

All indirect costs associated with the production process, such as utilities, maintenance, and factory equipment depreciation.

Units Produced

The quantity of items or goods made or produced by a company within a particular period.

Incremental Manufacturing Cost

The additional costs incurred to produce an additional amount of units, excluding fixed costs.