Many large universities rent out parts of their campuses to conference groups during the summer because such groups cause little damage, require little staff attention, and bring in large amounts of income.A university's decision to rent its campus to a conference group is most clearly based on
A)the idea that price and quantity selection is a single decision.
B)the principle of decreasing returns to scale.
C)marginal analysis.
D)average cost considerations.

Question

Quizplus · Accepted Answer

The university's decision to rent its campus to a conference group is based on marginal analysis, where it weighs the cost and benefit of renting out parts of its campus to conference groups during the summer. The university considers the marginal cost of the resources required for maintaining and/or accommodating the conference group against the marginal revenue earned from the rental income. As such, the decision to rent out its campus to a conference group is based on economic principles that consider the opportunity cost of each decision.

Many Large Universities Rent Out Parts of Their Campuses to Conference