Short Answer: 1. Table: Demand for Economics Tutoring Quantity of Economics Tuto

Question

Short Answer: 1. Table: Demand for Economics Tutoring Quantity of Economics Tutoring Economics Tutoring Demanded (hours) Price of (per hour) 6 6 0 Table: Demand for Economics Tutoring) Suppose Eric is the only economics tutor in town and therefore holds a monopoly on the sale of economics tutoring. The table shows the demand schedule for his services. Eric can offer additional hours of tutoring at a constant marginal cost of $1.50 per hour and he has no fixed costs hurgei acsasa monogpolit. how many hour llh erndatce wilhe b) Calculate Eric's monopoly profit.

Explanation / Answer

a) As a monopoly, Eric will look to maximise his profit. He will teach as many hours where his revenue could be maximum as per the table given above If he teacher three hours and charges a price of 3 per hour his profit will be maximum. A total revenue will be $9.

So, Eric will teach "3" hours and at a price of $3.

b) Eric cost is only $1.50 for one extra hour then in three hours his total cost will be $4.50 and total profit will be (Total revenue - Total cost) $4.50.

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