Reference no: EM133083942
The faculty at the Smith School have started sharing their business contacts with the administration and students to help in recruiting efforts. The hope is that these business contacts will provide job leads for students, potential students for the school and possibly donations to the school. The new dean of the Office of Career Management (OCM) surveyed MBA students, undergraduates, and administration officials to determine how much value they place on these faculty contacts. These three groups represents all the members of the Smith School who receive any value from these contacts. The survey revealed that full-time MBA students (as a whole) valued the senior faculty contacts at $100 each and the junior faculty contacts at $50 each. Senior faculty contacts are often higher up in an organization and thus potentially more valuable to students and administrators. The undergraduate students (as a whole) valued both junior and senior faculty contacts at $50 each. Finally, administrators (as a whole) valued senior faculty contacts at $50 each and junior faculty contacts at $30 each. The total number of senior faculty contacts available is 100. The total number of junior faculty contacts available is 50. The Smith School plans to make these contacts available to students and administrators at no charge.
a. Draw a demand curve combining the demand curves of each of the three sets of consumers for all 150 contacts.
b. Faculty claim that the opportunity cost of providing this contact information is $160 per contact. If faculty are paid $160 to provide these contacts, how many contacts should the Smith School purchase?
c. Suppose the administration asks for contributions from students who make use of the contacts in order to raise the money paid to faculty. Will enough money be collected to generate the optimal number of contacts? Explain.
d. The companies that comprise the faculty contacts also value the distribution of their employee names to students. In the past this form of networking has been beneficial in finding the best new employees. These companies place a value of $50 on the distribution of each senior and junior faculty contact. Will the Smith School change the number of contacts it purchases given this new information? Explain.
e. If the companies offered to contribute $25 per contact distributed by the Smith School, would this change your answer to part d? Explain.