Khen Carl R.

Abenoja ABM-B3
Economics M-W
PROBLEM: FIRM #3

Dear Economist,
My name is Cal Qulator. I run a mathematics tutoring business, but I
failed my economics classes. I’m not complaining, but I am confused about
something that’s going on with my business right now. Let me start from the
beginning. When I first opened my business, the going rate for tutoring was
P20. For that I was willing to tutor 2 students a week. I advertised that for
P40 I’d take 4 students and for P60 I’d take 6 students a week. Surprisingly,
even at P60, I had 6 students. However, when I switched to P80 – thinking I
could get 8 students, 2 of my students quit because they couldn’t afford it
and I had extra spaces. Why did that happen? Anyway, I decided to go back
to P60 and picked up those 2 students again. Recently, I inherited a large
sum of money and didn’t need to work anymore. I still wanted to tutor so I
said I’ll offer 8 spots a week and NO MORE. Strangely, even though I was
still charging P60, I filled up my remaining two spots AND had people
calling wanting more spots. Apparently, this has something to do with this
new math curriculum I guess. I only have room in my schedule for 8
students and that’s it, so, like a good capitalist I increased my price to P90
and all 8 spots filled. What’s going on now that wasn’t before?
Confused,
Cal Qulator
Evaluation/ Analysis of the Problem:
Dear Mr. Cal Qulator
I can see that there are no false notion of your business and its fortunate that many people
still want more slots to open, it’s an opportunity to have that kind of tutorial business. Well,
you are wondering when you increase the price of 80php two of your students quit because
they can’t afford it, but lately when many students are still wanting to be tutored by you. I
believe that not every student that wanting to be tutored by you can afford the prices
considering tutorial is beneficiary to the students for their learning. This is what we call
inconstancy of customers depending on their financial capabilities. The students will be
depending on your offer that’s why when you increase your price rates still many students
are willing to fill the slots and even wanting more. Thus, this also concludes on how good
you excel in doing your tutorials to the students leaving many students asking for more
slots. Consider this situation as an opportunity to your tutorial business.
Graph: The inconstancy period

4 Direction

0
1 20 40 60 60 80

X-Axis is the Prices

Y- Axis is the Students