Case study:
The "baby bust" of the 1960s and early 1970s resulted in the number of college-age 18 - and 19 year-olds contracting sharply from 1980 to 1993. The number of graduating high school seniors peaked in 1979 and declined to a low of 6.9 million in 1992, a drop of nearly 40%. Throughout the eighties, tuition at private and public universities rose at an average of 9% per year, a figure far above the rise in household family incomes. Then, the demographics began to reverse themselves; the number of 18- 19 year-olds began to increase in 1996 and will continue until they peak in 2010 at about 9.3 million for nearly a 33% increase in college-eligible population. The four-year cost of attending a private college now often exceeds $100, 000- including room and board.
Question:
What is the cost of adding an extra student to a typical class? Explain this in terms of the cost structure of a university.