# Question: Cornell is committed to its current policy of allowing the

Cornell is committed to its current policy of allowing the children of its faculty to attend the university without paying tuition. Suppose the demand curve of Cornell faculty children (CFCs) for slots in other universities is given by P = 30 - 5Q0, where P is the tuition price charged by other universities (in thousands of dollars) and Q0 is the number of CFCs who attend those universities. Cornell is now considering a proposal to subsidize some proportion k of the tuition charged to CFCs who attend other universities. Suppose Cornell knows that it can fill all its available slots with non- CFCs who pay tuition at the rate of $45,000/yr. Assuming that all CFCs who do not attend other universities will go to Cornell, what value of k will maximize Cornell’s tuition revenues, net of outside subsidies, if the tuition price at all other universities is $24,000/yr?

## Relevant Questions

What practical difficulty confronts laws that try to regulate what questions can be asked of job applicants during employment interviews?A new motorcycle sells for $9000, while a used motorcycle sells for $1000. If there is no depreciation and risk- neutral consumers know that 20 percent of all new motorcycles are defective, how much do consumers value a ...John has a von Neumann–Morgenstern utility function given by U = √M, where M is his income. If he becomes an economics professor, he will make M = 81/ yr with probability 1. If he becomes an attorney, he will make M = ...Suppose your current wealth, M, is 100 and your utility function is U = M2. You have a lottery ticket that pays $10 with a probability of 0.25 and $0 with a probability of 0.75. What is the minimum amount for which you would ...Abdul’s utility function is given by UA = MA2/MBWhere MA is Abdul’s wealth level and MB is Benjamin’s wealth level. Benjamin’s utility function is given by UB = MB2/MASuppose MA = MB = 10 initially, and suppose there ...Post your question