A tuition agency hires tutors to teach students. The following table displays how total output increases as tutors increase. No. of Tutors 1 2 3 4 5 Total No. of Students 4 10 18 24 3 Tutors cost $50 each regardless of how many students each tutor has. The agency paid $500 in non-refundable marketing fees to set up the business as a fix cost. In the short run, considering the shut-down condition, what is the lowest price per student Tom’s tuition agency can charge? Explain your answer.
A tuition agency hires tutors to teach students. The following table displays how total output increases as tutors increase. No. of Tutors 1 2 3 4 5 Total No. of Students 4 10 18 24 3 Tutors cost $50 each regardless of how many students each tutor has. The agency paid $500 in non-refundable marketing fees to set up the business as a fix cost. In the short run, considering the shut-down condition, what is the lowest price per student Tom’s tuition agency can charge? Explain your answer.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
A tuition agency hires tutors to teach students. The following table displays how total output
increases as tutors increase.
No. of Tutors 1 2 3 4 5
Total No. of
Students
4 10 18 24 3
Tutors cost $50 each regardless of how many students each tutor has. The agency paid $500 in non-refundable
marketing fees to set up the business as a fix cost. In the short run, considering the shut-down condition, what
is the lowest price per student Tom’s tuition agency can charge? Explain your answer.
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