Online Tutors offers monthly access to students for either or both math or science tutors. A market study found that the served by Online Tutors can be divided into two types of students: students needing help with math, who are primarily interested in math tutoring but may be interested in some science tutoring, and students who are primarily interested in science tutoring but may need some math tutoring. The study further estimates that there are 300 students who fit the category of "students needing help with math" and 200 students who fit the category of "students needing help with science."Â Online Tutors estimated demand for each type of tutoring service by type of student is given below. All costs are fixed so that maximizing total revenue is equivalent to maximizing profit.
The demand prices for monthly math and science tutoring services are given below:
Type of Student...............................Math Tutoring Only........................Science Tutoring Only
In Need of Math Tutoring............................$100........................................................$25
In Need of Science Tutoring..........................$50.......................................................$150
a. If the Online Tutoring decides to sell its tutoring services individually, what should it charge for math tutoring? What should it charge for science tutoring?
b. If Online Tutoring offers bundled services, what pricing would you recommend? What happens to its revenues if it uses bundling?