Figure 10-17
Your college decides to offer a psychology course as a MOOC that can be taken by students anywhere in the world, whether they are actually enrolled in your college or not. The demand and cost situation for the MOOC is shown in the figure.
-Refer to Figure 10-17.You are a member of a student government and are asked to recommend a price for the course and you argue: "I think the college should charge a price so that it just breaks even on the course." What price should you recommend?

Question

Figure 10-17
  Your college decides to offer a psychology course as a MOOC that can be taken by students anywhere in the world, whether they are actually enrolled in your college or not. The demand and cost situation for the MOOC is shown in the figure.
-Refer to Figure 10-17.You are a member of a student government and are asked to recommend a price for the course and you argue: "I think the college should charge a price so that it just breaks even on the course." What price should you recommend?

Quizplus · Accepted Answer

At the point where the demand curve intersects with the average total cost curve, the college would be breaking even on the course. This occurs at a price of $88, which is the recommended price. At a price of $0, the college would not generate any revenue and would not be able to cover the costs of offering the course. At prices above $88, the demand for the course decreases, and the college would not be able to cover its costs. Therefore, the best choice is to recommend a price of $88 to break even.

Figure 10-17 Your College Decides to Offer a Psychology Course