Why Is Student Financial Aid a Profit-Maximizing Decision for Universities

question 23

Multiple Choice

Why is student financial aid a profit-maximizing decision for universities?

• A) because universities only give financial aid to a very small number of students
• B) because as long as the students on financial aid pay some amount that is still greater than the marginal cost of attending the classes, the university still gains positive marginal profit
• C) because the university is able to charge no more than a dollar over the marginal cost of attending classes
• D) because the university gains goodwill by providing financial aid

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Definitions:

Implied Term

A condition or element not expressly mentioned in a contract but assumed to be included by virtue of the nature of the agreement or the circumstances under which it was made.

Second-Hand Dealer

A business or individual that buys and sells used goods.

Security Interest

A legal claim or lien on collateral that has been pledged, usually to secure repayment of a debt.

Clear Title

Ownership that is free of liens, disputes, or legal questions, fully enabling the transfer to another party.