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.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter7: Production, Costs, And Industry Structure

Section: Chapter Questions

Problem 37CTQ: How would an improvement in technology, like the high-efficiency gas turbines or Pirelli tire plant,...

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