Assume you are an analyst with an online university says UOP. The Admissions Director (AD) wants to determine the optimum number of students for each ECO561 class. You are provided with the following data:

Tuition is $1250 per student.
Instructor Pay $2500
Other incidental (variable) costs - $1000.00
Variable cost increases by 10% per additional student

How many students will you recommend to the AD?
What would be the profit for the given number of students?
Is this a profit-maximizing number of students?
Now assume that variable cost increases by 15% for each additional student, what is the new profit-maximizing number of students?
What is the relevance of the marginal rule (MR = MC) in your decision-making?

Answer rating: 100% (QA)

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