6-5. Nonlinear Cost and Revenue Analysis (Joanne Collins) Edith Wharton, a graduate of an Eastern business school has decided to establish a business school to compete with Alma Mater. She is planning for an institution that will handle from 1.000 to 5.000 students Based on a survey conducted by one of her associates, she believes the fol- lowing demand curve is relevant for her enterprise: Demand (Students) Tuition/Student/Year S10.000 9.000 8.000 7.000 6.000 1000 2000 3000 4000 5000 Her fixed costs (for facilities and administrative expenses) are expected to be 58.000.000 per year up to an enrollment of 3.000 students. Above 3,000 students additional facilities must be provided and fixed costs will double Her variable costs per student include the cost of instructors and instructional supplies. Assume she wishes a student/faculty ratio of 10:1 for an enrollment of 3,000 students and that instructors are paid an average of S30.000 per year. Supply costs per student are S1000. Finally, assume variable costs will decline by $1.00 per student for each additional student enrolled (beyond 3,000 students) and conversely will increase $1.00 per student for each reduction in the number of students below 3.000 students Required At what tuition does the school break-even? What tuition maximizes operating income