A major issue of contention at many colleges concerns the cost of meals that is rebated when a student does not sign up for the meal plan. The administration usually says that it should rebate only the marginal cost of the food alone, which it calculates at, say, $1.25 per meal. Students say that the marginal cost should include more costs, such as the saved space from fewer students using the facilities and the reduced labor expenses on food preparation. This can raise the marginal cost to $6.00.

a. Who is correct, the administration or the students?

b. How might your answer to a differ if this argument were being conducted in the planning stage, before the dining hall is built?

c. If you accept the $1.25 figure of a person not eating, how could you justify using a higher figure of about

$6.00 for the cost of feeding a guest at the dining hall, as many schools do?