Question: All Oxbridge University students are identical and they are all indifferent

All Oxbridge University students are identical, and they are all indifferent between attending the Oxbridge and their next best alternative. The only place students can buy textbooks is at the Barnes and Noble bookstore on campus. The bookstore wants to start charging admission, but needs the university's permission to do so. Use a graph to illustrate the answers to the following questions:
a. How much is the bookstore willing to pay the University for permission to charge admission?
b. If the bookstore starts charging admission, how much must the university cut tuition to prevent all the students from leaving?
c. Will the bookstore get the permission it’s seeking? Why or why not?

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  • CreatedJanuary 24, 2013
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