(Solution is in EXCEL With Detailed Calculation)

Assume you are an analyst with an online university say 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 each additional student

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

Use Table 9.3 page 182 and the attached sample table as guide