Question

A major issue of conte

ntion at many colleges concerns the cost of meals that is rebated when a

student does not sign up for the meal plan. The administration usually says that it should rebate

only the marginal cost of the food alone, which it calculates at, $1.25 per meal. Stu

dents say

that the marginal cost should include more costs, such as the saved space from fewer students

using the facilities and the reduced labor expenses on food preparation. This can raise the

marginal cost to $6.00 per meal.

a.

Who is correct, the

adminis

tration or the student?

b.

How might your answer to

a

differ if this argument were being conducted in the

planning stage, b

efore the dining hall is built?

c.

If you accept the $1.25 figure of a person not eating, how could you justify using a

higher figure of ab

out $6.00 for the cost of feeding a guest at the dining hall, as many

schools do?

d.

Classify the three costs (food, space, labor) as short or long

term variables.

Answer 1