A small college has space for a maximum of 1,000 students. The college can identify 500 of its students who are willing to pay $20,000 per year and 500 students who are willing to pay $10,000 per year. The college gas annual fixed costs of $10 million, and the variable cost for each additional student is $5,000. To continue operating, the college must receive payments equal to its total cost (that is, total fixed costs + total variable costs).
B. If the college charges all students the same tution, what tution can it charge to cover all it's costs?
1) $15,000
2) $20,000
3) $25,000
4) $10,000
5) None of the options