Brandon tutors economics students. He finds that when he charges RM5 per

hour, students demand a total of 30 hours of tutoring per week; however, when

he raises his rate to RM8 per hour, they demand only 26 hours of tutoring.

a) Calculate the price elasticity of demand for Brandon's tutoring.

b) Interpret the coefficient that you obtained in part (a).

c) Is demand for Brandon's tutoring price elastic, unit elastic, or price inelastic?

Should he increase the price? Which rate should he charge to maximize his

revenue?

d) Brandon finds that he can raise his rate to RM10 per hour during the week

before final exams and students will continue to demand 26 hours of tutoring.

Explain why this is so.