Imagine a new company enters a market selling tutoring. The firm does some experimentation in the market, and it reports the following data points. At $75 per student, 2,250 students sign up for tutoring. At $30 per student, 9,000 students sign up. At $150 per student, no students sign up. 1.Write the equation representing this demand curve. 2. Relax the assumption that demand is linear; instead, assume only that the law of demand holds. Given this assumption and the data you observe, what can we say about the number of students who sign up at prices greater than $75? The school’s accountants determine that when the price per student is $15 it can supply 1,500 spots for tutoring, and that when the price is $45, it can supply 7,500. 3.Relax the assumption that supply is linear; instead, assume only that the law of supply holds. Given this assumption and the data you observe, what can we say about the number of student slots the school supplies at prices greater than $400? 4.Find the equilibrium price and quantity. 5. Now imagine the government decides to encourage uptake of tutoring. To do so, it provides a $10 rebate (in other words, a subsidy) to every student who buys tutoring. Under this policy, find the new equilibrium quantity and price.
Imagine a new company enters a market selling tutoring. The firm does some experimentation in the market, and it reports the following data points. At $75 per student, 2,250 students sign up for tutoring. At $30 per student, 9,000 students sign up. At $150 per student, no students sign up.
1.Write the equation representing this demand curve.
2. Relax the assumption that demand is linear; instead, assume only that the
The school’s accountants determine that when the
3.Relax the assumption that supply is linear; instead, assume only that the law of supply holds. Given this assumption and the data you observe, what can we say about the number of student slots the school supplies at prices greater than $400?
4.Find the
5. Now imagine the government decides to encourage uptake of tutoring. To do so, it provides a $10 rebate (in other words, a subsidy) to every student who buys tutoring. Under this policy, find the new equilibrium quantity and price.
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