Econ Magic
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Among the students in economics class, the demand (marginal value) for ice cream is represented by p = 100 – q. Teacher has 40 scoops to distribute and wants to sell the ice cream at sixty cents per scoop. The dean thinks he should just give each student two scoops, claiming that some honors students cannot afford to pay. Teacher agrees to redistribute the proceeds equally (e.g. each student will get a rebate of $1.20 regardless of how much ice cream they buy). The dean says that, if he gives them $1.20 each, they will all buy two scoops anyway. Is teacher crazy or is there a method in his madness?