Related to the Economics in Practice on Page 179: a College

question 59

Multiple Choice

Related to the Economics in Practice on page 179: A college has an annual operating budget of $120 million. It educates and houses 1,500 students, for an average cost of $80,000 per student per year. Revenues per student from tuition, room, and board are considerably less than $80,000. Which of the following, if true, would strengthen the claim that increasing the number of students educated per year will result in a net financial gain for the college?

• A) Other colleges spend more than $80,000 per student per year.
• B) The vast majority of the operating budget is composed of fixed costs.
• C) Spending more than it earns will force the college to either borrow or use some of its endowment to make up the difference.
• D) The college expects that it will be able to maintain its academic standards even if it increases enrollment.

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Definitions:

Assessment Mechanism

A system or method used to evaluate, measure, or appraise someone's abilities, needs, or performance.

Recognize

The act of identifying or acknowledging the existence, validity, or legality of something.

Home Visits

A professional practice involving providers visiting the homes of their clients to deliver services or conduct assessments in a familiar and comfortable setting for the client.

Instincts

Innate, typically fixed patterns of behavior in animals and humans in response to certain stimuli.