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:

Eyes Closed

A state in which the eyelids cover the eyes, blocking visual input.

Awake Person

A state of consciousness in which an individual is alert, aware of their environment, and experiencing sensory input actively.

Brain Waves

The patterns of electrical activity generated by the brain, detectable with an electroencephalogram.

Personality

The combination of characteristics or qualities that form an individual's distinctive character, influencing patterns of thought, feeling, and behavior.