Question

Question 7(26 points): On your way to the cashier's office (to pay yet another dorm damage bill), you overhear UR. Accepted (the Dean of Admissions) having a violent argument with I. M. Smart (the director of the Computer Center) about an equation that Smart built to understand the number of applications that the school received from high school seniors. In need of an outside opinion, they turn to you to help them evaluate the following regression results (standard errors in parentheses): 8-150 + 270A, +1 SOT, +350S, (25) 41 50) (300) R=0.50 N 22 (annual) where the number of high school seniors who apply for admission in yeart A the number of people on the admission staff who visit high schools full time spreading information about the school in yeart T = tuition in yeart measured in $1.000 S. number of athletic teams in yeart a) (2 points) If you have addition resources to spend to attract more students would you hire an additional athletic coach to start a new athletic team or an additional admission person that visits high schools? Assume that the couch salary is $60000 while the admission person salary is $40000

Answer 1

A)

Effect of increase in admission person who visits high school = 270 seniors

Effect of new coach bringing in new team = 350(1) = 350 seniors

Cost of admission person = $40,000

Cost of coach = $60,000

Thus,

Marginal cost of each student:

In case of admission person being hired = 40,000/270 = $148.148

In case of coach being hired = 60,000/350 = $171.42

Since cost of an additional student is higher in case of a coach being hired, it is advisable to hire additional admissions person that visits high schools.