North Little Rock, Arkansas has a budget of approximately $100 million per year. State desegregation aid of $7.6 million a year is coming to an end, and the superintendent is trying to figure out how to cut costs to make up the shortfall.

a. Considering isoquants and student achievement, what would you expect to be the outcome on student achievement when the districts budget declines by $8 million? Why?

b. One possible solution to make up some of the shortfall is to cut some other portion of the budget, ceteris paribus. Combined with the decrease in aid related to school integration, what impact would you expect this to have on student achievement? Explain how well you think the isoquant framework does in explaining the impact on achievement.