As the principle of a private school you need to hire certified teachers and non-certified teachers. Both types of staff are necessary as they are imperfect substitutes. At your school, you have 20 certified teachers and 15 non-certified teachers. At the current mix of staff, certified teachers can teach classes of 25 students while non-certified teachers can only teach classes of 15 students (however this ratio changes as you change the number of certified and non-certified teachers at your school - i.e. it is not constant). Your certified teachers make $40,000 per year while the non-certified teachers make $25,000.

(a) If the "marginal product" is the number of students a teacher has in class and the price is the teacher's annual salary, what is the MP/$ for certified and non-certified teachers?

(b) Are you minimizing costs at the current mix of faculty? If not, do you need more certified or non-certified teachers?

(c) The Teach for America program comes into your state and pays $10,000 toward the salary of non-certified teachers. How does the subsidy change your answers to part (a) and (b)?