Question

A study of U.S. colleges and universities resulted in the demand equation q = 20, 000 − 2 p , where q is the enrollment at a public college or university and p is the average annual tuition (plus fees) it charges. Officials at Enormous University have developed a policy whereby the number of students it will accept per year at a tuition level of p dollars is given by the supply equation, q = 7, 500 + 0.5 p . Find the equilibrium tuition price, p . A)$2,500 B)$3,750 C)$5,000 D) $7,500 E) $10,000

Continuing with the previous problem, what is the consumers’ surplus at the equilibrium tuition price? A) $15,000,000 B) $25,000,000 C) $37,500,000 D) $40,000,000 E) $50,000,000

Continuing with the previous problem, what is the producers’ surplus at the equilibrium tuition price? A) $25,000,000 B) $50,000,000 C) $75,000,000 D) $100,000,000 E) $150,000,000

Answer 1