In: Economics
4. University of Notre Dame is a premier institution that draws
students from all over the...
4. University of Notre Dame is a premier institution that draws
students from all over the world to its campus. Although it is
privately funded, it aspires to world-class quality and reputation,
which are enhanced when out-of-state residents enroll. Data suggest
that in-state enrollment can be described by the equation:
QI = 25,000 - PI,
where QI = in-state enrollment and PI =
in-state tuition. Out-of-state enrollment is given
by:
QN = 13,500 -
.5PN.
- If tuition for in-state students is $14,000 and for
out-of-state students is $19,000, what is total enrollment and
demand elasticity for each type of student?
- Suppose that the marginal cost to the university of an
additional student is $7,000. Is Major University maximizing profit
at its current tuition charges? Explain.
- Because of major funding cuts, the university is expecting to
reduce its total enrollment to 11,000 students next year. The
university is free to set any tuition charges it wishes. If the
goal is to maximize total tuition revenue, what should in-state
tuition, out-of-state tuition, and respective enrollments be?
Explain why