For each quantity of tutoring sessions he could give, fill in the Total Revenue column in the following table with the most total revenue he could earn at each quantity of sessions. Then, complete the table by computing the marginal revenue at each quantity of tutoring sessions. Students (Sessions per week) 0 1 2 3 4 5 6 7 8 9 Willingness to Pay (Dollars per tutoring session) 40 38 36 34 32 30 28 26 24 Total Revenue (Dollars per week) 0 40 76 108 136 160 180 196 208 216 Marginal Revenue (Dollars per tutoring session) If Nick has to charge a single price to all of his students, he will maximize his profit by giving number, which is 3 tutoring sessions. If Nick can practice perfect price discrimination, he should give 4 tutoring sessions. 40 36 32 28 24 20 16 12 8 tutoring sessions. This is 2 than the efficient Now suppose Nick cannot practice perfect price discrimination, but he is able to find a hurdle that identifies the group of students who are willing to pay at least $34 for a tutoring session (the "list price" submarket), and those who are not (the "discount price" submarket). In order to maximize his profit under this pricing scheme, he should charge 5 in the list price submarket and 6 in the discount price submarket.
For each quantity of tutoring sessions he could give, fill in the Total Revenue column in the following table with the most total revenue he could earn at each quantity of sessions. Then, complete the table by computing the marginal revenue at each quantity of tutoring sessions. Students (Sessions per week) 0 1 2 3 4 5 6 7 8 9 Willingness to Pay (Dollars per tutoring session) 40 38 36 34 32 30 28 26 24 Total Revenue (Dollars per week) 0 40 76 108 136 160 180 196 208 216 Marginal Revenue (Dollars per tutoring session) If Nick has to charge a single price to all of his students, he will maximize his profit by giving number, which is 3 tutoring sessions. If Nick can practice perfect price discrimination, he should give 4 tutoring sessions. 40 36 32 28 24 20 16 12 8 tutoring sessions. This is 2 than the efficient Now suppose Nick cannot practice perfect price discrimination, but he is able to find a hurdle that identifies the group of students who are willing to pay at least $34 for a tutoring session (the "list price" submarket), and those who are not (the "discount price" submarket). In order to maximize his profit under this pricing scheme, he should charge 5 in the list price submarket and 6 in the discount price submarket.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Mj.eco
Transcribed Image Text:Nick works as a private tutor on evenings and weekends. He has no fixed costs, and his opportunity cost of giving a tutoring session is $25.
He has nine potential students each week whose willingness to pay are shown in the following table:
Student
A
B
C
D
E
F
G
H
I
Willingness to Pay
(Dollars per tutoring session)
40
38
36
34
32
30
28
26
24
Suppose Nick has to charge a single price to all of his students.
Transcribed Image Text:For each quantity of tutoring sessions he could give, fill in the Total Revenue column in the following table with the most total revenue he could earn
at each quantity of sessions. Then, complete the table by computing the marginal revenue at each quantity of tutoring sessions.
Students
(Sessions per week)
0
1
2
3
4
5
6
7
8
9
Willingness to Pay
(Dollars per tutoring session)
40
38
36
34
32
30
28
26
24
Total Revenue
(Dollars per week)
0
40
76
108
136
160
180
196
208
216
Marginal Revenue
(Dollars per tutoring session)
If Nick has to charge a single price to all of his students, he will maximize his profit by giving 11
number, which is 3
tutoring sessions.
If Nick can practice perfect price discrimination, he should give 4 tutoring sessions.
40
36
32
28
24
20
16
12
8
tutoring sessions. This is 2 than the efficient
Now suppose Nick cannot practice perfect price discrimination, but he is able to find a hurdle that identifies the group of students who are willing to
pay at least $34 for a tutoring session (the "list price" submarket), and those who are not (the "discount price" submarket). In order to maximize his
profit under this pricing scheme, he should charge 5 in the list price submarket and 6 in the discount price submarket.
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