High School

Jordan charges $20 an hour for tutoring and currently tutors 5 hours a week. He knows he will be able to tutor an additional two hours a week for every $5 he drops his prices.

What rate should he charge to maximize revenue? How many hours a week will he tutor to maximize revenue?

Answer :

Jordan should charge $15 per hour and tutor 7 hours a week to maximize his revenue.

To find the rate that Jordan should charge to maximize revenue, we need to consider the relationship between his tutoring hours and the price he charges.

Currently, Jordan charges $20 per hour and tutors 5 hours a week, resulting in a weekly revenue of $20 x 5 = $100.

Let's assume Jordan lowers his rate by $5. As a result, he will be able to tutor an additional two hours per week. So, if Jordan reduces his price to $15, he will be able to tutor 7 hours a week. This will result in a weekly revenue of $15 x 7 = $105.

By further reducing his rate to $10, Jordan would be able to tutor 9 hours a week. This would give him a weekly revenue of $10 x 9 = $90.

From the above analysis, we can conclude that reducing the price further beyond $15 will result in a decrease in revenue. Hence, Jordan should charge $15 per hour to maximize revenue.

At this rate, Jordan will tutor 7 hours a week, which will maximize his revenue.

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