Deck 37: Economics of College and University Education

Question 1

From 1995 to 2013 the share of revenue to public institutions of higher education attributable to appropriations

A)increased to 57% from 44%.
B)increased to 44% from 26%.
C)remained constant.
D)decreased to 44% from 57%.

Answer 1

D

Question 2

From 2007 to 2013 total tuition revenue to public institutions of higher education

A)increased 52%.
B)increased 26%.
C)remained constant.
D)decreased 15%.

Answer 2

B

Question 3

In 2014, more than ________ was spent to educate _________ college students.

A)$223 million; 152 million
B)$315 billion; 52 million
C)$517 billion; 20 million
D)$661 billion; 8 million

Answer 3

C

Question 4

To a prospective full-time college student, the cost of a college education reflects the cost of

A)tuition.
B)tuition and fees.
C)tuition, fees, books and supplies.
D)tuition, fees, books and supplies plus any income foregone while in school.

Question 5

From 2007 to 2013 total federal, state, and local appropriations to public institutions of higher education

A)increased $230 billion.
B)increased $47 billion.
C)remained constant.
D)decreased $71 billion.

Question 6

From 1995 to 2013 the share of revenue to public institutions of higher education attributable to tuition

A)increased to 41% from 29%.
B)increased to 5% from 26%.
C)remained constant.
D)decreased to 29% from 41%.

Question 7

From 1995 to 2013 total revenues to public institutions attributable to tuition increases

A)increased $230 billion.
B)increased $47 billion.
C)remained constant.
D)decreased.

Question 8

From 2002 to 2014 long-term debt at four-year public institutions of higher education

A)increased four-fold.
B)doubled.
C)remained constant.
D)decreased by half.

Question 9

In 2014, expenditure per student in higher education was approximately

A)$4,289.
B)$9,053.
C)$14,846.
D)$25,850.

Question 10

Examine Figure 37.1. What is the tuition charged in a market that has no subsidy? Figure 37.1

A)T1
B)T2
C)T*
D)The answer is unknown from this diagram.

Question 11

From 1995 to 2013 total revenues public institutions

A)increased $230 billion.
B)increased $47 billion.
C)remained constant.
D)decreased.

Question 12

A university education costs more per student than a high school education because
A)college professors teach less than high school teachers.
B)college professors earn more than high school teachers.
C)colleges are typically in a monopoly position.
D)

A)and B).

Question 13

Examine Figure 37.1. What is the tuition and subsidy revenue per student in a market that has a subsidy equal to the external benefit? Figure 37.1

A)T1
B)T2
C)T*
D)The answer is unknown from this diagram.

Question 14

Examine Figure 37.1. What is the tuition charged the student in a market that has a subsidy equal to the external benefit? Figure 37.1

A)T1
B)T2
C)T*
D)The answer is unknown from this diagram.

Question 15

Examine Figure 37.1. What is the number of students educated in a market that has no subsidy? Figure 37.1

A)S'
B)S*
C)All who have any desire for it
D)The answer is unknown from this diagram.

Question 16

When textbooks are produced, the idea for a new book typically comes from

A)the publisher.
B)faculty needing a book for their class.
C)faculty thinking they have a better idea.
D)department chairs.

Question 17

Examine Figure 37.1. What is the number of students educated in a market that has a subsidy equal to the external benefit? Figure 37.1

A)S'
B)S*
C)All who have any desire for it
D)The answer is unknown from this diagram.

Question 18

An "advance" is called that because

A)it is paid before there are royalties but any royalties will be reduced by the amount of the advance.
B)it is paid after there are royalties.
C)it is paid instead of royalties.
D)it is paid before there are royalties though actual royalties are not reduced by the amount of the advance.

Question 19

Over the last 34 years, costs of college tuition, room and board have increased by

A)32%.
B)87%.
C)138%.
D)702%.

Question 20

College textbooks royalties are typically expressed as a

A)percentage of net sales.
B)percentage of gross sales.
C)fixed dollar amount per edition.
D)fixed dollar amount for all editions.

Question 21

If a college textbook costs $80 (for a new book)at a college bookstore, it probably cost the bookstore

A)$100.
B)$80.
C)$60.
D)$40.

Question 22

College textbook royalties are paid based on the sales to

A)faculty.
B)students.
C)bookstores.
D)internet outlets.

Question 23

The royalty that an author receives on the resale of a used college textbook is

A)typically 15%.
B)half the typical new sale rate, or 7.5%.
C)set at 2%.
D)zero.

Question 24

The college textbook adoption decision is made by

A)students.
B)university administrators.
C)state governing bodies.
D)faculty or faculty committees.

Question 25

New editions of college textbooks come out

A)every year regardless of the degree to which new material warrants it.
B)when the publisher gets the urge.
C)when the author gets the urge.
D)in part, because authors and publishers only profit on new sales.

Question 26

One side effect of the increased speed with which used books circulate is

A)used books are cheaper.
B)used books are more expensive.
C)new editions come out more frequently.
D)new editions come out less frequently.

Question 27

If a book has a royalty rate of 15%, 10,000 copies are sold to bookstores at $50 each, and the bookstore sells the books to students for $62.50, the author will be paid

A)$75,000 (.15*50*10,000).
B)$125,000 ((62.50-50)*10,000).
C)$93,750 (.15*62.50*10,000).
D)nothing.

Question 28

Without a copyright, the high fixed costs of textbook creation

A)would be more easily recoverable.
B)would be nearly impossible to recover.
C)would be lower.
D)would be higher.

Question 29

College textbooks are marketed to faculty for adoption by

A)selling it to them for the full price.
B)selling it to them for half price.
C)giving it to them free of charge.
D)paying them money to use the book.

Question 30

One feature of the new textbook market is that publishers face ____ fixed costs and ____ variable costs.

A)high; high
B)high; low
C)low; high
D)low; low

Question 31

The variable cost of producing a college textbook is usually around _____ of its price.

A)80%
B)50%
C)40%
D)20%

Question 32

Once the breakeven level of sales has been reached, each additional book sold earns _______ for the publisher.

A)a decreasing, but positive additional profit
B)a substantial, positive additional profit
C)nothing
D)a small, negative additional profit

Question 33

A book that sells new for $125 will typically sell used for around

A)$25.
B)$50.
C)$75.
D)$100.

Question 34

College calculus textbooks change from edition to edition because

A)even elementary calculus is an ever-changing discipline.
B)recent discoveries challenge the legitimacy of Newton's methods.
C)it's the only way for the publisher and author to make money.
D)faculty demand it.

Question 35

Once faculty receive textbooks and choose not to use them they are

A)required to mail them back to the publisher.
B)free to do what they wish with the book, including selling it.
C)required to destroy the book.
D)required to give the book to a student or library.

Question 36

If a college textbook costs $80 (for a new book)at a college bookstore, the royalty paid on the book is likely

A)$15.
B)$12.
C)$9.
D)$5.

Question 37

The copyright gives its owner

A)the exclusive right to sell a work of intellectual property.
B)the ability to protect its "brand" like Coca-Cola.
C)the exclusive right to sell an invention.
D)(usually students)the right to make photocopies for friends.

Question 38

If a book has a royalty rate of 15% and 12,000 copies are sold to bookstores at $50 each the bookstore returns 2000 unsold books to publishers, and the bookstore sells the books to students for $62.50 the author will be paid

A)$90,000 (.15*50*12,000).
B)$75,000 (.15*50*10,000).
C)$93,750 (.15*62.50*10,000).
D)$112,500 (.15*62.50*12,000).

Question 39

The copyright holder for most college textbooks is the

A)publisher.
B)author.
C)bookstore.
D)student.

Question 40

The profit a publisher makes on the sale of a used college textbook is

A)the same as when they sell it new.
B)half of the amount they made when it sold for the first time.
C)$2 per book.
D)zero.

Question 41

An e-book that sells new for $200 will typically be sold back to the bookstore "used" for

A)nothing (it can't be re-sold).
B)$50.
C)$75.
D)$100.

Question 42

A physical book that sells new for $100 will rent for around

A)$25.
B)$50.
C)$75.
D)$100.

Question 43

A book that sells new for $100 will typically sell used for around

A)$25.
B)$50.
C)$75.
D)$100.

Question 44

If faculty choose to stay with an old edition of a book this is predicted to

A)increase royalty payments to authors.
B)decrease royalty payments to authors.
C)have no impact on royalty payments to authors.
D)Increase costs to students

Question 45

An e-book that sells new for $125 will typically be sold back to the bookstore "used" for

A)nothing (it can't be re-sold).
B)$50.
C)$75.
D)$100.

Question 46

A physical book that sells new for $125 will rent for around

A)$50.
B)$62.50.
C)$75.
D)$100.

Question 47

A book that sells new for $200 will typically be sold back to the bookstore "used" for

A)$26.50.
B)$50.
C)$100.
D)$150.

Question 48

A book that sells new for $200 will typically sell used for around

A)$25.
B)$50.
C)$100.
D)$160.

Question 49

Commercialization of the internet has helped to increase the price of new textbooks by facilitating

A)development of copyrighted material.
B)re-sale of used books.
C)advertising of new books.
D)shipment tracking at FedEx.

Question 50

A physical book that sells new for $200 will typically sell as an e-book for around

A)$50.
B)$100.
C)$150.
D)$200.

Question 51

If faculty choose to stay with an old edition of a book this is predicted to cause

A)new textbook prices to rise.
B)used textbook prices to rise (for the current edition).
C)used textbook prices to rise (for the older edition).
D)used textbook prices to fall (for the older edition).

Question 52

The payment to the author, usually expressed as a percentage of sales to bookstores, is called

A)a payoff.
B)a royalty.
C)the admiralty.
D)the annuity.

Question 53

A physical book that sells new for $100 will typically sell as an e-book for around

A)$25.
B)$50.
C)$75.
D)$100.

Question 54

A physical book that sells new for $125 will typically sell as an e-book for around

A)$50.
B)$62.50.
C)$75.
D)$100.

Question 55

The rental market for textbooks is predicted to

A)increase royalty payments to authors.
B)decrease royalty payments to authors.
C)have no impact on royalty payments to authors.
D)increase costs to students

Question 56

Payment of a share of prospective royalties to the author before publication is called the

A)advance.
B)bonus.
C)stipend.
D)allowance.

Question 57

A book that sells new for $100 will typically be sold back to the bookstore "used" for

A)$26.50.
B)$50.
C)$75.
D)$100.

Question 58

An e-book that sells new for $100 will typically be sold back to the bookstore "used" for

A)nothing (it can't be re-sold).
B)$50.
C)$75.
D)$100.

Question 59

A book that sells new for $125 will typically be sold back to the bookstore "used" for

A)$26.50.
B)$48.75.
C)$62.50.
D)$100.

Question 60

A physical book that sells new for $200 will rent for around

A)$50.
B)$100.
C)$150.
D)$200.

Question 61

If e-books begin to be the most popular form of textbooks, it is

A)in the best interests of publishers and authors.
B)in the best interests of traditional book stores.
C)likely to increase costs to students.
D)likely to be self-defeating for publishers.

Question 62

In the United States, the average government subsidy for a college education at a flagship, state institution is approximately __ for every $1 spent by the student.

A)$0.65
B)$2
C)$5
D)$10

Question 63

Since 1960 the percentage of the population with a college degree has increased from __ to __.

A)less than 10%; near 35%
B)around 20%; near 85%
C)less than 2%; near 50%
D)near 40%; near 50%

Question 64

If e-books begin to be the most popular form of textbooks, it is

A)in the best interests of publishers and authors.
B)in the best interests of internet book sellers.
C)likely to increase costs to students.
D)likely to be self-defeating for publishers.

Question 65

Between 1992 and 2012, the percentage of students borrowing to pay for college

A)decreased from 18% to 13%.
B)remained constant at 30%.
C)increased from 34% to 57%.
D)decreased from 73% to 58%.

Question 66

If e-books begin to be the most popular form of textbooks, it is

A)the worst possible outcome for publishers and authors.
B)in the best interests of internet book sellers.
C)likely to increase costs to students.
D)likely to damage the physical used book market.

Question 67

In the 1980s, President Reagan shifted government education policies toward

A)repeal of the GI Bill.
B)increased availability of subsidized student loans.
C)education-related income tax deductions and credits.
D)increased reliance upon direct grants, such as Pell Grants.

Question 68

Estimates of the value of a college education to the student are that there is

A)a $330,000 net present value benefit.
B)a $30,000 per year benefit.
C)a $330,000 net present value loss.
D)an external benefit.

Question 69

The strategy of faculty choosing to stay with an old edition of a book is

A)in the best interests of publishers.
B)in the best interests of authors.
C)likely to be unsustainable if too many try it.
D)likely to be replicated by everyone.

Question 70

Estimates of the value of a college education are based on

A)actual costs and benefits.
B)present value.
C)enumerated costs and benefits.
D)plausible deniability.

Question 71

The strategy of faculty choosing to stay with an old edition of a book is

A)in the best interests of publishers.
B)in the best interests of authors.
C)likely to reduce the costs to students.
D)likely to be replicated by everyone.

Question 72

To compare the costs of a college education with its monetary benefits, economists use the concept of

A)actual costs and benefits.
B)present value.
C)enumerated costs and benefits.
D)plausible deniability.

Question 73

In the United States, the average government subsidy for a college education at a private institution is approximately __ for every $1 spent by the student.

A)Less than $0.65
B)$2
C)$5
D)$10

Question 74

Suppose a college education is choosing between a modestly expensive school ($100,000 over 4 years)and a less expensive school ($40,000 over 4 years)the student should

A)Choose the more expensive school only if the present value of the difference in salary is $60,000 or more.
B)Choose the more expensive school only if the present value of the difference in salary is $60,000 or less.
C)Choose the more expensive school only if the difference in salary will total $60,000 or more.
D)Choose the more expensive school only if the difference in salary will total $60,000 or less.

Question 75

In the United States, the average government subsidy for a college education at a regional, bachelors-only public institution is approximately __ for every $1 spent by the student.

A)$0.85
B)$2
C)$5
D)$10

Question 76

Suppose a college education is choosing between an expensive school ($200,000 over 4 years)and a less expensive school ($40,000 over 4 years)the student should

A)Choose the more expensive school only if the present value of the difference in salary is $160,000 or more.
B)Choose the more expensive school only if the present value of the difference in salary is $160,000 or less.
C)Choose the more expensive school only if the difference in salary will total $160,000 or more.
D)Choose the more expensive school only if the difference in salary will total $160,000 or less.

Question 77

To compare the costs of a college education a wise student, when choosing between an expensive school with a high expected income and a less expensive school with a lower expected income would use the concept of

A)actual costs and benefits.
B)present value.
C)enumerated costs and benefits.
D)plausible deniability.

Question 78

Between 1992 and 2012, the percentage of college students receiving federally funded grants

A)increased from 8% to 13%.
B)slowly increased to around 47%.
C)increased from 58% to 73%.
D)decreased from 73% to 58%.

Question 79

Between 1992 and 2012, the percentage of college students receiving some form of aid

A)increased from 8% to 13%.
B)remained constant at 35%.
C)increased from 58% to around 84%.
D)decreased from 73% to 58%.

Question 80

In the 1990s President Clinton worked for

A)the creation of the Pell Grant.
B)the GI Bill.
C)the introduction of student loans.
D)tax credits and deductions for education.