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Eastern University is committed to its current policy ofallowing the children of its faculty to...

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Economics

Eastern University is committed to its current policy ofallowing the children of its faculty to attend the universitywithout paying tuition. Suppose the demand curve of Eastern facultychildren (CFCs) for slots in other universities is given by

P=32-5Q_(0)

. where

P

is the tuition price charged by other universities (in thousandsof dollars) and

Q_(0)

is the number of CFCs who attend those universities. Eastern isnow considering a proposal to subsidize some proportion

k

of the tuition charged to CFCs who attend other universities.Suppose Eastern knows that it can fill all its available slots withnon-CFCs who pay tuition at the rate of

$46,(000)/(y)r

. Assuming that all CFCs who do not attend other universitieswill go to Eastern, what value of

k

will maximize Eastern's tuition revenues, net of outsidesubsidies, if the tuition price at all other universities is

$26,(000)/(y)r

? Instructions: Round your answer to 2 decimal places.

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