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    What is the cost of adding an extra student to a typical class?

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    Case study:

    The "baby bust" of the 1960s and early 1970s resulted in the number of college-age 18 - and 19 year-olds contracting sharply from 1980 to 1993. The number of graduating high school seniors peaked in 1979 and declined to a low of 6.9 million in 1992, a drop of nearly 40%. Throughout the eighties, tuition at private and public universities rose at an average of 9% per year, a figure far above the rise in household family incomes. Then, the demographics began to reverse themselves; the number of 18- 19 year-olds began to increase in 1996 and will continue until they peak in 2010 at about 9.3 million for nearly a 33% increase in college-eligible population. The four-year cost of attending a private college now often exceeds $100, 000- including room and board.


    What is the cost of adding an extra student to a typical class? Explain this in terms of the cost structure of a university.

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    Solution Preview

    Hi there,

    I'm not terribly sure how the data presented in the first part of the question relates to the question you have asked in the second part but I will answer your question as best I can.

    I would argue that for a 'typical' class in a 'typical' school the real cost of adding an extra seat to the class is in fact zero (or at least very close to zero)

    There are two types of costs - variable costs which alter in ...

    Solution Summary

    Here is just a sample of what you'll find in this solution:

    "The same goes for the buildings and facilities etc within the university. There may be some small additional requirement in terms of administration cost, transactions costs, or in facilities costs incurred (paper and ink for the printers or something like that) but these are likely to be minimal when compared to the fixed costs involved in running the school."