Chapter 34
College and University Education: Why Is It So Expensive?
Multiple Choice
1. In 2012, more than ________ was spent to educate _________ college students.
A) $223 million, 152 million
B) $315 billion, 52 million
C) $471 billion, 21 million
D) $561 billion, 8 million
2. In 2012, expenditure per student in higher education was approximately
A) $4,289.
B) $9,053.
C) $14,846.
D) $22,429.
3. Over the last 31 years, costs of college tuition, room and board have increased by
A) 32%.
B) 87%.
C) 137%.
D) 629%.
4. When textbooks are produced, the idea for a new book typically comes from
A) the publisher.
B) faculty needing a book for their class.
C) faculty thinking they have a better idea.
D) department chairs.
5. An “advance” is called that because
A) it is paid before there are royalties but any royalties will be reduced by the amount of the
advance.
B) it is paid after there are royalties.
C) it is paid instead of royalties.
D) it is paid before there are royalties though actual royalties are not reduced by the amount
of the advance.
6. College textbooks royalties are typically expressed as a
A) percentage of net sales.
B) percentage of gross sales.
C) fixed dollar amount per edition.
D) fixed dollar amount for all editions.
7. College textbook royalties are paid based on the sales to
A) faculty.
B) students.
C) bookstores.
D) internet outlets.
8. College textbooks are marketed to faculty for adoption by
A) selling it to them for the full price.
B) selling it to them for half price.
C) giving it to them free of charge.
D) paying them money to use the book.
9. Once faculty receive textbooks and choose not to use them they are
A) required to mail them back to the publisher.
B) free to do what they wish with the book, including selling it.
C) required to destroy the book.
D) required to give the book to a student or library.
10. If a college textbook costs $80 (for a new book) at a college bookstore, it probably cost the
bookstore
A) $100.
B) $80.
C) $60.
D) $40.
11. If a college textbook costs $80 (for a new book) at a college bookstore, the royalty paid on
the book is likely
A) $15.
B) $12.
C) $9.
D) $5.
12. If a book has a royalty rate of 15%, 10,000 copies are sold to bookstores at $50 each, and the
bookstore sells the books to students for $62.50, the author will be paid
A) $75,000 (.15*50*10,000).
B) $125,000 ((62.50-50)*10,000).
C) $93,750 (.15*62.50*10,000).
D) nothing.
13. If a book has a royalty rate of 15% and 12,000 copies are sold to bookstores at $50 each the
bookstore returns 2000 unsold books to publishers, and the bookstore sells the books to
students for $62.50 the author will be paid
A) $90,000 (.15*50*12,000).
B) $75,000 (.15*50*10,000).
C) $93,750 (.15*62.50*10,000).
D) $112,500 (.15*62.50*12,000).
14. The variable cost of producing a college textbook is usually around _____ of its price
A) 80%.
B) 50%.
C) 40%.
D) 20%.
15. New editions of college textbooks come out
A) every year regardless of the degree to which new material warrants it.
B) when the publisher gets the urge.
C) when the author gets the urge.
D) in part, because authors and publishers only profit on new sales.
16. One side effect of the increased speed with which used books circulate is
A) used books are cheaper.
B) used books are more expensive.
C) new editions come out more frequently.
D) new editions come out less frequently.
17. One feature of the new textbook market is that publishers face ____ costs and ____ variable
costs
A) high fixed; high variable
B) high fixed; low variable
C) low fixed; high variable
D) low fixed; low variable
18. Once the breakeven level of sales has been reached, each additional book sold earns _______
for the publisher.
A) a decreasing, but positive additional profit
B) a substantial, positive additional profit
C) nothing
D) a small, negative additional profit
19. The royalty that an author receives on the resale of a used college textbook is
A) typically 15%.
B) half the typical new sale rate, or 7.5%.
C) set at 2%.
D) zero.
20. The profit a publisher makes on the sale of a used college textbook is
A) the same as when they sell it new.
B) half of the amount they made when it sold for the first time.
C) $2 per book.
D) zero.
21. College calculus textbooks change from edition to edition because
A) even elementary calculus is an ever changing discipline.
B) recent discoveries challenge the legitimacy of Newton’s methods.
C) it’s the only way for the publisher and author to make money.
D) faculty demand it.
22. The copyright holder for most college textbooks is the
A) publisher.
B) author.
C) bookstore.
D) student.
23. The copyright gives its owner
A) the exclusive right to sell a work of intellectual property.
B) the ability to protect its “brand” like Coca-Cola.
C) the exclusive right to sell an invention.
D) (usually students) the right to make photocopies for friends.
24. Without a copyright, the high fixed costs of textbook creation
A) would be more easily recoverable.
B) would be nearly impossible to recover.
C) would be lower.
D) would be higher.
25. The college textbook adoption decision is made by
A) students.
B) university administrators.
C) state governing bodies.
D) faculty or faculty committees.
26. A book that sells new for $125 will typically sell used for around
A) $25.
B) $50.
C) $75.
D) $100.
27. A book that sells new for $125 will typically be sold back to the bookstore “used” for
A) $26.50.
B) $48.75.
C) $62.50.
D) $100.
28. A book that sells new for $100 will typically sell used for around
A) $25.
B) $50.
C) $75.
D) $100.
29. A book that sells new for $100 will typically be sold back to the bookstore “used” for
A) $26.50.
B) $50.
C) $75.
D) $100.
30. A book that sells new for $200 will typically sell used for around
A) $25.
B) $50.
C) $100.
D) $150.
31. A book that sells new for $200 will typically be sold back to the bookstore “used” for
A) $26.50.
B) $50.
C) $100.
D) $150.
32. A physical book that sells new for $100 will typically sell as an eBook for around
A) $25.
B) $50.
C) $75.
D) $100.
33. A physical book that sells new for $100 will rent for around
A) $25.
B) $50.
C) $75.
D) $100.
34. An eBook book that sells new for $100 will typically be sold back to the bookstore “used”
for
A) nothing (it can’t be re-sold).
B) $50.
C) $75.
D) $100.
35. A physical book that sells new for $125 will typically sell as an eBook for around
A) $50.
B) $62.50.
C) $75.
D) $100.
36. A physical book that sells new for $125 will rent for around
A) $50.
B) $62.50.
C) $75.
D) $100.
37. An eBook book that sells new for $125 will typically be sold back to the bookstore “used”
for
A) nothing (it can’t be re-sold).
B) $50.
C) $75.
D) $100.
38. A physical book that sells new for $200 will typically sell as an eBook for around
A) $50.
B) $100.
C) $150.
D) $200.
39. A physical book that sells new for $200 will rent for around
A) $50.
B) $100.
C) $150.
D) $200.
40. An eBook book that sells new for $200 will typically be sold back to the bookstore “used”
for
A) nothing (it can’t be re-sold).
B) $50.
C) $75.
D) $100.
41. Payment of a share of prospective royalties to the author before publication is called the
A) advance.
B) bonus.
C) stipend.
D) allowance.
42. The payment to the author, usually expressed as a percentage of sales to bookstores, is called
A) a payoff.
B) a royalty.
C) the admiralty.
D) the annuity.
43. Commercialization of the internet has helped to increase the price of new textbooks by
facilitating
A) development of copyrighted material.
B) re-sale of used books.
C) advertising of new books.
D) shipment tracking at FedEx.
44. The rental market for textbooks is predicted to
A) increase royalty payments to authors.
B) decrease royalty payments to authors.
C) have no impact on royalty payments to authors.
D) increase costs to students
45. If faculty choose to stay with an old edition of a book this is predicted to
A) increase royalty payments to authors.
B) decrease royalty payments to authors.
C) have no impact on royalty payments to authors.
D) Increase costs to students
46. If faculty choose to stay with an old edition of a book this is predicted to cause
A) new textbook prices to rise.
B) used textbook prices to rise (for the current edition).
C) used textbook prices to rise (for the older edition).
D) used textbook prices to fall (for the older edition).
47. The strategy of faculty choosing to stay with an old edition of a book is
A) in the best interests of publishers.
B) in the best interests of authors.
C) likely to be unsustainable if too many try it.
D) likely to be replicated by everyone.
48. The strategy of faculty choosing to stay with an old edition of a book is
A) in the best interests of publishers.
B) in the best interests of authors.
C) likely to reduce the costs to students.
D) likely to be replicated by everyone.
49. If eBooks begin to be the most popular form of textbooks, it is
A) in the best interests of publishers and authors.
B) in the best interests of internet book sellers.
C) likely to increase costs to students.
D) likely to be self-defeating for publishers.
50. If eBooks begin to be the most popular form of textbooks, it is
A) in the best interests of publishers and authors.
B) in the best interests of traditional book stores.
C) likely to increase costs to students.
D) likely to be self-defeating for publishers.
51. If eBooks begin to be the most popular form of textbooks, it is
A) the worst possible outcome for publishers and authors.
B) in the best interests of internet book sellers.
C) likely to increase costs to students.
D) likely to damage the physical used book market.
52. In the United States, the average government subsidy for a college education at a public
institution is approximately __ for every $1 spent by the student.
A) $1
B) $1.50
C) $5
D) $10
53. In the United States, the average government subsidy for a college education at a private
institution is approximately __ for every $1 spent by the student.
A) $1
B) $2
C) $5
D) $10
54. In the 1990s President Clinton worked for
A) the creation of the Pell Grant.
B) the GI Bill.
C) the introduction of student loans.
D) tax credits and deductions for education.
55. In the 1980s, President Reagan shifted government education policies toward
A) repeal of the GI Bill.
B) increased availability of subsidized student loans.
C) education-related income tax deductions and credits.
D) increased reliance upon direct grants, such as Pell Grants.
56. Between 1992 and 2008, the percentage of college students receiving some form of aid
A) increased from 8% to 13%.
B) remained constant at 35%.
C) increased from 59% to 79.5%.
D) decreased from 73% to 58%.
57. Between 1992 and 2008, the percentage of students borrowing to pay for college
A) decreased from 18% to 13%.
B) remained constant at 30%.
C) increased from 31% to 53%.
D) decreased from 73% to 58%.
58. Between 1992 and 2008, the percentage of college students receiving federally funded grants
A) increased from 8% to 13%.
B) slowly increased to 33%.
C) increased from 58% to 73%.
D) decreased from 73% to 58%.
59. Since the 1980s federal spending on higher education has taken the form of
A) direct payments to faculty.
B) a substantial shift toward grants rather than loans.
C) a substantial shift toward subsidized loans rather than grants.
D) direct payments to universities.
60. True or false? There is no good reason for college to cost as much as it does.
A) True
B) False
61. True or false? Both college tuition and college textbook prices have increase much more
rapidly than has inflation.
A) True
B) False