Answer to Question #122396 in Microeconomics for AA

Question

Private tuition centres are a big industry in a country with over 500 such centres that reportedly serve more than 95% of all college students. Tuition fees can be high and some families pay more than $2000 a month to send their children to private tuition. Using the theory and models of market structure, examine this industry. Should government be worried about any aspect of how an industry with this particular market structure will perform?

Answer 1

• There is no restrictions in charging more or demanding less hence prices are liable to change depending on the demand and supply. Since parents are choosing a better life for their kids as they invest in tutoring,the private tutors are in demand hence can increase the price they ask to offer their services
• Free entry and exit of firms.The firm is free to enter or leave the market such that if there is hope of profit the firm will enter in business and if there is loss the firm will leave
• Tutors should identify their customers, what are their needs and wants before starting tutoring business
• There will be less government intervention in this business since it is possible to encourage competition from other firms producing the same services