This Question: 1 pt 34 of 45 (45 complete) This Quiz: 45 pts possible Price and

Question

This Question: 1 pt 34 of 45 (45 complete) This Quiz: 45 pts possible Price and cost student) $150 120 (dollars pe 72 ATC 40 MC MR 15,000 24,000 30,000 36,000 Quantity of students enrolled Your college decides to offer a psychology course as a MOOC that can be taken by students anywhere in the world, whether they are actually enrolled in your college or not. The demand and cost situation for the M00C is shown in the figure. The faculty member who designed the course argues: l think the course should be priced so that the maximum number of students enroll. Which price should this faculty member favor? OA. $0 B. $40 O C. $88 D. $150

Explanation / Answer

Answer

Q1

The faculty assumes that the demand is lower at P=0 so they keep the price at MC=P where demand is more than any other price or we can say it is efficient enrollment.

P=$40

Option B

Q2

The profit is maximum at MR=MC

where

P=150

ATC=120

Q=15000

Profit=(P-ATC)*Q=(150-120)*15000=450000

option D

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