Suppose that in tutoring services market, it is common knowledge that 30% of the tutors are in excellent quality and parents are willing to offer $500 per hour consuming their services. This group of tutors is willing to provide services at $350 per hour or higher. The rest of the tutors are of fine quality and considered by parents as worth only $150 per hour. This group of tutors is willing to provide services at $100 per hour or more. Parents are not able to tell the difference between the two types of tutors but the tutors themselves do know which type they themselves belong to.

(a)What is the name and nature of the problem illustrated in the case above?

(b) Predict how the market for tutor services market will end up, using the information from the case for illustration

(c) Suggest TWO different approaches with example for excellent tutors to avoid the prediction stated in part (b).

(d) Explain the existence of different scale of tutoring centers in Hong Kong market. i) private tutors or small learning centers

ii) large learning centers