Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
Abstract The tuition industry grown exponentially throughout years in Malaysia, thus it has interested me to pursue a research to confirm its market structure and type of competition upon reading an article in a newspaper. This curiosity has led me to form a research question “To what extent are the tuitions in Taipan Business Centre USJ, a form of monopolistic competition?” The location of the investigation is narrowed into a small area of neighborhood in order for the investigation to be more precise. Primary data used are interviews which was conducted with 7 out of 12 firms in TBC and surveys among 60 parents picked using random sampling in order to know their behavior towards the market structure. Secondary data is obtained in form of literature review and supporting data for primary data. Few limitations include not being able to get some confidential data but this does not prevent from the research to continue. The barriers of entry are medium as it has little elements of brand loyalty and a few procedures. Although the product differentiation does not seem significant, survey from parents shows that it plays a big role as it’s more of a non-price determinant rather than price determinant. Thus, price war does not exist as price maintained at a range of market price accepted and producers take actions independently. The fact that there’s entry and exit of firms and ability of firms to gain abnormal profit in the short run confirms it is a monopolistic competition. There is fairly perfect knowledge among consumers, and second degree price discrimination is practiced. In conclusion, tuition centres in TBC are a form of monopolistic competition as it has strong product differentiation, with slight oligopoly features due to existence of little brand loyalty, and price rigidity. (294 words)
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Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
Introduction Malaysia is a developing country that is now focusing on the tertiary sector, especially on education. One of the services that is popular in this country is tutoring service in tuition centres1. According to a local newspaper, the demand for tutoring services in tuition centers2 has been on the rise in the past few years and this may lead to some firms to compete by price 3 “…this extra curricular has by now become such an integral part of the primary education, in the same way as classroom teaching and learning, that one conditions the other, and one cannot function without the other4 (UNESCO 1991: 41).” This reflects as the amount Malaysians spent in education which is 5.79 billion in 20095. Education system in Malaysia is very academic oriented and nowadays parents see tuition centres as a necessity despite of their high cost of living6.Tuition classes among the students back in the old days used to be a supplementary for the weak students to do better in class but now it’s more of a trend. The topic seems interesting to me due to the socio economic background of the people in my area, and whether they choose based on price or other factors and their behavior towards the
1
Tuition centers, Wikipedia, Accessed 20 March 2013 The tuition industry might be unfamiliar to some countries, as it is more recognized as private tutoring services outside Malaysia 3 Nevash Nair “Increase in demand for tuition in Malaysia,” The Star 5 November 2012 [Accessed 20 March 2013] 4 Centre for Public Policy Studies, ELECTIONS ‘08 DAILY POLICY FACTSHEET #6: EDUCATION 21 [Accessed 30 April 2013] 5 Trading Economics, PUBLIC SPENDING ON EDUCATION; TOTAL (% OF GDP) IN MALAYSIA, 2009 [Accessed 4 May 2013] 6 Cost of living in Subang Jaya Malaysia, Numbeo [Accessed 4 May 2013] 2
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Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
competition between the tuition centres. This leads me to form the research question “To what extent are the tuition centres in Taipan Business Centre (TBC), USJ, a form of monopolistic competition?” The fact that there is more than 10 tuition centers7 in a small area and suspicions about whether they compete by price war or non-price, the investigation is worth to be carried out.
Hypothesis With this, it is hypothesized that TBC’s tuition centres as a monopolistic competition. This was assumed due to the large number of competitors in such a small area. Besides that, the firms in the area focused more on competing based on non-price competition. Lastly, due to having some monopoly power, they managed to practice second degree price discrimination.
7
Appendix A : Name of tuition centres
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Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
Methodology The primary research is carried out by interviewing 9 out of 13 tuition owners only due to confidentiality. The site is also restricted in order to make the research more accurate. Questions that is essential to aid the characteristics of the market structures, collusion and competition is asked. Price of each of the services is collected and analyzed to investigate on whether the tuition centres practice price discrimination or not to enhance their price setting ability. They are taken on the same day as price can fluctuate. Questionnaires using random sampling on the same day is given to 60 parents to find out about their behavior in purchasing tuition classes service. The secondary research is carried out by getting resources from the internet and books.
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Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
Review of Economic Concepts Market structures have a significant impact on the firms to determine the nature of the competition and the pricing 8. Perfect Competition The obvious thing about perfect competition is there’s a huge number of buyers and sellers. Thus, any actions of consumer or producer would not effect on the market price 9, so it is a pricetaker. The products are homogenous, which means “of the same or a similar kind or nature”10 means the products have no difference between one another. Therefore, demand curve is perfectly elastic since there are many substitutes. There is very low barriers to entry and exit.11 Lastly, every economic agents are aware of the market price of the commodity. Monopolistic Competition This type of competition characterized by many buyers and sellers but have slight monopoly power due to product differentiation. Differentiated products is also known as heterogenous product12 which is similar but not identical13. It has many buyers and sellers but the downward-sloping demand curve is due to it being more elastic because of the product
8
A2 Micro: Market Structure, Conduct & Performance, Tutor2U [Accessed 23 April 2013] 9 Dominick Salvatore. Microeconomics Theory and Applications Fourth Edition, USA,Oxford University Press, 2003 pg 265 10 Homogenous, Merriam Webster [Accessed 30 April 2013] 11 Dominick Salvatore. Microeconomics Theory and Applications Fourth Edition, USA,Oxford University Press, 2003 pg 265 12 Dominick Salvatore. Microeconomics Theory and Applications Fourth Edition, USA,Oxford University Press, 2003 pg 354 13 Ibid: 354
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Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
differentiated. Barriers to entry and exit are low as the cost of getting in is easy but each of the firm has its small percentage share in the industry which won’t affect the whole market. Oligopoly Oligopolies are a few firms dominating the industry by having a large fraction of percentage share over the total industry. Each of the market can be determined by using its concentration ratio. Each producer competes to gain market share by lots of ways such as attempt on advertising and differentiating the product. An interesting feature of this type of competition would be the competition are so stiff that every action of a firm would have a significant effect on the others. They are interdependent to each other.
“
”14 Figure 1: Characteristics of each market structure
14
Ch. 10 Perfect Competition, Monopoly, and Monopolistic Competition, Department of Economics, Volkswirtschaftslehre, Johannes Kepler Universitat [Accessed 30 May 2013]
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Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
FINDINGS AND ANALYSIS OF INVESTIGATION DETERMINANTS OF THE MARKET STRUCTURE MONOPOLISTIC COMPETITION 5.1 Low barriers to entry Barriers to entry is a very important criteria when determining the type of market structures. It is defined as something that prevents a firm to entering a certain industry, can be artificial or natural. These includes the cost of setting up, economies of scale among existing firms, government regulation, cost of marketing and brand loyalty 15 that already exist among consumers16. Name of tuition centre
Startup Costs (approximation)(RM)
Number of years
Mawar
RM 80 000
[Accessed 30 April 2013] 6. PUBLIC SPENDING ON EDUCATION; TOTAL (% OF GDP) IN MALAYSIA, 2009 [Accessed 4 May 2013] 7. Cost of living in Subang Jaya Malaysia, Numbeo [Accessed 4 May 2013] 8. A2 Micro: Market Structure, Conduct & Performance, Tutor2U [Accessed 23 April 2013] 9. Homogenous, Merriam Webster [Accessed 30 April 2013] 10. Ch. 10 Perfect Competition, Monopoly, and 11. Monopolistic Competition, Department of Economics, Volkswirtschaftslehre, Johannes Kepler Universitat [Accessed 30 May 2013] 12. Pusat Tuisyen Kemuncak Jaya, Blogspot [Accessed 30 May 2013] 13. Primary School Evaluation Test (UPSR) – Wikipedia , [Accessed 1 July 2013] 14. Lower Secondary Assessment (PMR) , Wikipedia [Accessed 1 July 2013] 15. Malaysian Certificate of Education (SPM), Wikipedia [Accessed 1 July 2013] Page 37 of 76
Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
APPENDICES
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Ahmad Kamal, Syanaz Bazil 000592-0049
Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
APPENDIX A: Name of tuition centres 1. Mawar 2. STC 3. Get A 4. Sri Restu 5. Kancil 6. TTC 7. Cu-A 8. Mastermind 9. Era Tinta 10. Inisiatif 11. Generasi Muda 12. Sri Mawar Bestari 13. Tutorial Lee
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Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
Appendix B: Interview questions with the tuition centre owners
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Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
INTERNATIONAL BACCALAUREATE DIPLOMA PROGRAMME
MARA College Banting : ECONOMICS EXTENDED ESSAY To what extent are the tuition centres in Subang Business Centre a form of monopolistic competition?
NAME OF RESPONDENT: POSITION:
TUITION CENTRE:
BARRIERS TO ENTRY 1.1 How long has the business been in the industry in this area? // Berapa lamakah bisnes encik/puan telah ada dalam industri ini di kawasan USJ 9? □ 0-5 years □ 5-10 years □ 10-15 years □ 15-20 years □ 20-25 years □ >25 years
1.2 How hard is it for sir to get into the business? // Susahkah encik untuk memasuki bisnes ini? □ Very Hard// Sangat susah □ Hard // Susah □ Normal // Biasa □ Easy // Senang □ Very Easy // Sangat senang How// Bagaimana: __________________________ 2.2 What procedures do you need to go through to get into this business? // Prosedur apa yang perlu dilalui oleh encik/Puan untuk masuk ke dalam industry ini? _____________________________________________________________________
3. PRODUCTS/SERVICES What are your products/services?
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Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
If brochure is available, please provide. The number of packages offered, its price, and the time (weekdays or weekends). PACKAGES
PRICE (At weekdays)
PRICE (At weekends)
Evening
Evening
Night
Std 1 (All subjects) Std 1 (1 Subject) Std 2 (All subjects) Std 2 (1 Subject) Std 3 (All subjects) Std 3 (1 Subject) Std 4 (All subjects) Std 4 (1 Subject) Std 5 (All subjects) Std 5 (1 Subject) Std 6 (All subjects) Std 6 (1 Subject) UPSR Bengkel Ceramah Form 1 (All subjects) Form 1 (1 Subject) Form 2 (All subjects) Form 2 (1 Subject) Form 3 (All subjects) Form 3 (1 Subject) PMR Form 4 (All subjects) Form 4(1 Subject) Form 5 (All subjects) Form 5 (1 Subject) SPM Form 6 (All subjects) Form 6 (1 Subject)
Is there a one-to-one private/special class?
-
How about the extra classes during holidays? Bengkel etc? Page 42 of 76
Night
Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
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3
Ahmad Kamal, Syanaz Bazil 000592-0049
Which subject is the most demanded? Rank from 1 being lowest to 10 being highest □ Bahasa Malaysia □ English □ Mathematics □ Additional Mathematics □ Physics □ Biology □ Sejarah □ Perakaunan □ Ekonomi Asas □ Geografi □ Bahasa Mandarin □ ICT
PRICING How do you price your services? Based on? □ Quality of lecturers (their qualification) □ Lowest price in the area □ As advised by the franchisor □ Market price 1. Do you keep track the price of the competitor? // Adakah anda sentiasa mengetahui harga bisnes lain? □ Yes // Ya □ No // Tidak 2. Do you know what’s the maximum price of the consumer is willing and able to purchase? // Adakah anda mengetahui berapakah harga tertinggi yang pelanggan mampu dan rela membeli? □ Yes // Ya □ No // Tidak How much//Berapa?: ________________ 3.2 Does government intervention exist in determining the prices? // Adakah kerajaan memasuk campur dalam menentukan harga? □ Yes // Ya □ No // Tidak
4
How do you set prices at different periods of time? // Bagaimanakah anda menentukan harga? Adakah berbeza pada setiap musim? Page 43 of 76
Extended Essay Economics HL “To what extent are the tuition centres in Ahmad Kamal, Syanaz Bazil Taipan Business Centre, USJ, a form of monopolistic competition? 000592-0049 Do price discrimination exist? During school holidays? (Peak hours) First degree price discrimination (consumer pays the exact price that the consumer is prepared to pay) Second degree price discrimination Firms set higher prices when the demand on the season is higher (Peak time) Is demand is inelastic during exam seasons?
5
Do you collude with other firms? // Adakah anda bekerjasama dengan perniagaan lain dalam menentukan harga?
6
COSTS What is the average total cost per month?
How big is the size of tuition centre?
- Fixed Cost (Rent) ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ - Variable Cost ( How much electric bills, maintenance etc)
No of teachers hired (full time) ______________________ (part time) _____________________ Qualification of the teachers : _________________________ The range of their salary: ______________________________ How many years are their teaching experience :_______________ Were they an examiner:__________________________________ Other extra costs and expenses (for advertising, transportation for students (if available)
How many people do you hire to help with the business? //Berapa ramai pekerja yang anda ambil untuk menolong bisnes? (Kerani/family to handle the management) □ 1-2 people // 1-2 orang □ 3-4 people // 3-4 orang Page 44 of 76
Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition? □ 5-6 people // 5-6 orang
Ahmad Kamal, Syanaz Bazil 000592-0049
3. SALES & PROFIT Number of students per class? ___________________ Number of classes available? ____________________ How many students are enrolled per month? ____________ How many students are enrolled per year? ______________ By elementary school _______________________ By secondary school? _______________________ Total number of students the tuition centre is having now per year/per course (form)? ____________________________ Is there an increase or decrease in number of students every month? __________________________________________________ The statistics kemasukan pelajar How much is the percentage of new intake? Do people come to their extra ceramahs/motivational/extra class holiday session? _____________________________________________ 4. COMPETITION 5. If one other firms lowers their price will you follow them? // Jika lebih dari tiga perniagaan yang menjual produk yang sama anda menurunkan harga, adakah anda akan menurunkan harga juga? □ Yes // Ya □ No // Tidak 6. If two or three other firms lower their price, will you follow them? // Jika lebih dari tiga perniagaan yang menjual produk yang sama anda menurunkan harga, adakah anda akan menurunkan harga juga? □ Yes // Ya □ No // Tidak
6. ADVERTISING & PROMOTION (NON-PRICE COMPETITION) Non-price competition
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Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
Things that can be done to market the product. Brand loyalty For example is by providing the transportational service so that people will be more attracted as parents these days are too busy to send their children to respective tuition places. Extra benefits for orphans Additional benefits – Extra Sulit papers from negeri Free motivational talk 7
Do you advertise? // Adakah anda mengiklan? □ Yes // Ya □ No // Tidak How?// Bagaimana:_____________________________________ How much is the cost to advertise: What kind of promotion strategies did you use? ___________________________________________________________________
- The statistics every year of how many students who have gotten straight As in their big examination. - How has the pemansuhan PMR and UPSR has affected their business? ________________________________________________________________________ -
Is there any change (increase/decrease) in price for the last 2 years? _________________________________________________________________ Has there been any complaint from parents? _________________________________________________________________
-
Has there been any evidence of brand loyalty? _________________________________________________________________
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Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
APPENDIX C: Survey among the customers (parents)
INTERNATIONAL BACCALAUREATE DIPLOMA PROGRAMME MARA College Banting : ECONOMICS EXTENDED ESSAY Consumer Questionnaire This questionnaire is designed to investigate To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition question. /Sila tandakan untuk setiap soalan.
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Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
1.
What’s your race? // Apakah bangsa anda? □ Malay // Melayu □ Chinese // Cina □ Indian // India □ Others please specify // Lain-lain sila nyatakan : ________
2.
What is the highest level of education that you have achieved? // Apakah tahap tertinggi kelulusan anda? □ SPM / O-Level / IGCSE □ STPM / A-Level / Other Pre-U// Lain-lain pra-universiti □ Diploma □ Bachelor // Sarjana Muda □ Master // Sarjana □ PhD // Doktor falsafah
3.
What is your salary per month? // Berapakah gaji anda dalam masa sebulan?
□ RM1,000 and below / RM1,000 dan ke bawah □ RM1,001 – RM3,000 □ RM3,001 – RM5,000 □ RM5,001 – RM10,000 □ RM10,000 and above / RM10,000 dan ke atas 4.
How important is education to you? //Adakah pelajaran dan pendidikan penting bagi anda? □ Not important // Tidak penting □ Slightly important // Sedikit Penting □ Important // Penting □ Very important // Sangat penting
5.
How many kids do you have? // Berapa banyakkah anak yang anda ada? □ 1-3 □ 3-5 □ 6-8 □ >9
6.
Are all your children in a tuition centre? If yes, how many children? // Adakah semua anak anda ditempatkan di pusat tuisyen? Jika ya, berapa orang anak yang pergi ke tuisyen? □ 1-3 □ 3-5 □ 6-8
7.
Do any of your children go to more than one tuition centre? If yes, how many tuition centres? // Adakah anak anda pergi lebih daripada satu pusat tuisyen? Jika ya, berapa? □ 1-2 □ 3-4 □ >5
8.
How many tuition centres do you survey first to get the right tuition for your children? // Berapa banyak kah pusat tuisyen yang anda akan survey dahulu sebelum anda menempatkan anda di pusat tuisyen tersebut? □ 1-3 □ 3-5 □ 6-8 □ 9-10 □ 11-13 □ 14-15
9.
How much do you spend on your children’s tuition (per month)? // Berapa banyakkah duit yang dibelanjakan untuk tuisyen anak anda? □ RM100 and below / RM100 dan ke bawah □ RM101 – RM300 □ RM301 – RM500 □ RM501 – RM1000 □ RM1,000 and above / RM1,000 dan ke atas
10. On what range of money would you willing to pay for a tuition (per subject)?// Kadar berapakah duit yang anda sanggup membayar tuisyen (untuk satu subjek)? □ RM 20-RM30 □ RM31-RM40 □RM41-RM50 □RM51-60 □ RM61-70 □ RM71-80 □ RM81-90 □ RM91-100
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Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
□ RM100 11. On what range of money would you be willing to pay for a tuition (all subject)?// Kadar berapakah duit yang anda sanggup membayar tuisyen (untuk semua subjek)? □ RM100-200 □ RM201-RM300 □ RM 301-400 □ RM 401-500 □ >RM 500 12. Your opinion on the price of tuition classes? // Pendapat anda tentang harga kelas tuisyen? □ Very expensive // Sangat mahal □ Expensive // Mahal □ Normal/Affordable // Berpatutan □ Cheap // Murah □ Very cheap // Sangat Murah 13. How long have you been sending your kids to tuition centres?// Sudah berapa lamakah anda telah menghantar anakanak anda ke pusat tuisyen? □ Less than 6 months // Kurang daripada 6 bulan □ 1 year // 1 tahun □ 1 year-3 years // 1 tahun – 3 tahun □ 4-6 years // 4-6 tahun □ >7 years // Lebih daripada 7 tahun 14. Please rank most important factor that affect your purchase of the service (tuition services)? // Apakah faktor paling penting yang mempengaruhi anda dalam menghantar anak anda ke sesebuah pusat tuisyen? □ Quality // Kualiti □ Price (Budget) // Harga □ Student’s Preferences // Kesukaan pelajar □ Brand loyalty // Kesetiaan terhadap jenama □ Services // Servis □ Location// Lokasi □ Reputation // Reputasi □ Facilities // Kemudahan □ Word of mouth // Khabar dari rakan-rakan yang dipercayai □ Availability of transport // Kemudahan servis pengangkutan 15. Please rank the least important factor that affect your purchase of the service (tuition services)? // Apakah faktor paling kurang penting yang mempengaruhi anda dalam menghantar anak anda ke sesebuah pusat tuisyen? □ Quality // Kualiti □ Price (Budget) // Harga □ Student’s Preferences // Kesukaan pelajar □ Brand loyalty // Kesetiaan terhadap jenama □ Services // Servis □ Location// Lokasi □ Reputation // Reputasi □ Facilities // Kemudahan □ Word of mouth // Khabar dari rakan-rakan yang dipercayai □ Availability of transport // Kemudahan servis pengangkutan 16. Do you think by sending your kids to the tuition centre, their results will be improved? // Adakah dengan menghantar mereka ke pusat tuisyen, anda berasa keputusan peperiksaan mereka akan meningkat? □ Yes // Ya □ No // Tidak 17. If the tuition centre that you’ve been sending your kids to has not made any change in their school’s results, would you change to other tuition centres / home tuitions? // Jika pusat tuisyen yang anak anda pergi tidak membawa apa-apa perubahan kepada keputusan peperiksaan anak-anak anda, adakah anda akan menghantar mereka ke pusat tuisyen lain atau tuisyen persendirian?
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Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
□ Yes // Ya □ No // Tidak 18. What are your reasons for sending your kids to tuition centres and not school tuitions/home tuitions? // Apakah sebab anda menghantar anak-anak anda ke pusat tuisyen dan bukan pusat tuisyen persendirian ataupun kelas tambahan di sekolah?
19. ? If school provides school tuition would you rather go to school tuition and not private tuition centres? Why? // Jika sekolah anak anda menawarkan kelas tambahan, adakah anda menghantar mereka ke kelas tambahan di sekolah sahaja dan bukan tuisyen persendirian? ___________________________________________________________ 20. If your income increases, would you more likely to spend more in fancier tuition centres with more expensive but experienced, and good reputation lecturer? // Jika pendapatan anda meningkat, adakah anda cenderung untuk membelanjakan wang anda di pusat tuisyen yang lebih mahal? □ Yes // Ya □ No // Tidak 21. How many percentages of discount do you need to convince you to go to the other tuition centres? (assuming it’s the same lecturer and the time for the class is the same) // Berapa peratus diskaun yang anda perlu untuk meyakinkan anda untuk anak anda pergi ke pusat tuisyen lain? (jika guru yang mengajar ialah orang yang sama dan masa untuk kelas tersebut adalah sama) □ 5% □ 10% □ 15% □ 20% □ 30% □ 50% 22. Are you aware of the cheapest and the most expensive tuition centres in USJ 9? // Adakah anda sedar akan kedai yang menyediakan servis tuisyen yang paling murah dan paling mahal di Usj 9? □ Yes // Ya □ No // Tidak 23. With the abolishment of UPSR and PMR, will you still send your children to attend classes at tuition centres? // Dengan adanya pemansuhan UPSR dan PMR, adakah anda akan masih menghantar anak-anak anda ke pusat tuisyen? □ Yes // Ya □ No // Tidak
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Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
APPENDIX D: An online newspaper article about the demand for tuitions in Malaysia
The Star Online > Monday November 5, 2012 Increase in demand for tuition in Malaysia By NEVASH NAIR
[email protected] Photos by AZHAR ARIF
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Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
Help for exams: Alagesan (above) said when he started teaching from his home initially, parents knocked on his door at midnight to enrol their children for his classes. The demand for tuition in Malaysia has catapulted what was once a cottage industry to a million-dollar business MALAYSIANS are accustomed to the tuition, especially in urban areas. Many would have either attended tuition classes or at the very least known a classmate that received tutoring in a centre or at home from a private tutor. It has become the common solution for parents who want their children to excel academically. In a letter to the editor published in The Star on March 1, 2012, Aida Tan said: “Parents and guardians have lost faith in the teaching methodology that resembles mass production without any quality check.” She added: “Tuition has become an essential part of learning, owing to the breakdown of the school teaching system.” Tan is just one of many Malaysians who have openly raised concerns over the rise and rise of tuition centres. The boom in tuition centres is easily attributed to the perception that the country’s education system is flawed. “Teachers are overworked, underpaid and they have between 35 to 45 students in each class. They now have certain key performance indicators to be met and they Page 52 of 76
Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
sometimes rush through their lessons,” said one disgruntled parent who declined to be named. “I have to send my child to a tuition centre so that he can catch up on his lessons and ask any questions that he might have,” the parent added. An ‘Asian F’ When the character Mike Chang from the television musical Glee received an A- for his chemistry exam the term “An A- is an Asian F” entered popular culture.
Jostling for attention: Some experts say the number of tuition centres has doubled over the last decade. Just like Chang’s fictional parents, Malaysian parents also place tremendous pressure on their children to achieve good results in school. In 2005, it was reported that, Malaysian parents fork out anywhere between RM200 and RM2,000 a month in tuition fees for each child. According to Datuk Dr. Alagesan Arumugam, founder and managing director of Creative Education Intellect Sdn Bhd, this figure has almost doubled today.
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Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
“We have become a nation obsessed with A’s, so much so that most straight-A students now are not of the quality of those from 20 years ago,” said Alagesan, who adds that students should not be blamed for this lack of quality. “We have good syllabi and policies in place but we lack implementation in public schools,” said Arumugam who has been a tutor since 1982. “When I first started teaching from my home full-time in 1988, I had parents knocking my door at midnight to enrol their children for classes. So in 1994, when I decided to move into a centre, I had 300 students and it has been steady growth since,” revealed Alagesan, who frowns on the low quality of some educators in the tuition centres that have been mushrooming due to increased demand. Quantity over quality According to the Education Ministry, there were 2,967 registered tuition centres with 194,567 students as at Dec 31, 2010. Meanwhile, tutor-student matchmaking site tuitionplaza.com said the number of tuition centres operating without proper registration is not known exactly, but is estimated to at least match the legally operating ones. According to industry experts, today, the number of tuition centres is double that reported nine years ago. Alagesan said with the large number of tuition centres located in the Klang Valley, students have been empowered with the right to choose, thus quality is not top of the list. “Price is a major factor these days. Even though parents are willing to fork out hundreds of ringgit for tuition, new players are spoiling the market. Fees are reduced and they play the volume game,” said Alagesan. Currently, Creative Education Intellect charges RM40 per subject. Each subject is taught for 90 minutes per session.
Page 54 of 76
Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
Alagesan: In 1994 when I decided to move into a centre, I had 300 students and it has been a steady growth until recent times. Private vs centre Private tuition, referred to varyingly as home tuition, personal tuition, one-to-one tuition, individual tuition and small-group tuition, is also gaining popularity in the Klang Valley. Tuitionplaza.com, on their website, says, “Many feel that a private tutor is capable of providing that extra push when needed because school teachers have too many classes and too little time for individual attention. Especially when it is a year for major examinations. Burdened by large classes, individual attention is an extremely rare commodity in schools. “Tutors, on the other hand, will be attuned to the learning habits and skills of students that the teaching process is customised for maximum understanding and retention.” Ahmad Hambal Noorsham, who has been a private tutor for six years, said he can earn between RM40 to RM70 an hour. “I became a full-time private tutor last year as I enjoy teaching. My mother was a teacher and I have been teaching for so many years now,” he said. Page 55 of 76
Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
Ahmad explained that tutoring opportunities are always available as there are at least five tutor-student matching websites in Malaysia, each with a very strong database. He further revealed that a private tutor can earn between RM4, 000 and RM10, 000 a month depending on the number of students the tutor takes on, though it is not an easy ride to earn big bucks. “When I started private tutoring, it was difficult. I had to build my reputation and now most of my students are through referrals,” said Ahmad. Both Ahmad and Alagesan believe tuition centres can co-exist alongside private tutors as the market is big enough for both sets of players. “Different students have different needs. Some require personalised attention and some can excel in a small group,” said Alagesan.
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Page 56 of 76
Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
APPENDIX E: Location of the tuition center using Google Maps
Page 57 of 76
Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
APPENDIX F : Photos of the tuition centre
45
46
47
45
http://www.google.com.my/imgres?um=1&sa=N&rlz=1C1LENN_enMY514MY514&hl=en&biw=1366&bi h=667&tbm=isch&tbnid=HYfPmtqaDrgHPM:&imgrefurl=http://panpages.my/listings/my185935-kancileducation-group-sdn-bhd&docid=7FFyvUVEZ2u9wM&imgurl=http://s-yoolkimages.yoolk.com/72425F4A-99A2-11E1-B04C12314000960A.jpg&w=1525&h=945&ei=2Nl7UdaJO4b3rQf8mIDIDQ&zoom=1&ved=1t:3588,r:58,s:0,i:2 65&iact=rc&dur=675&page=3&tbnh=177&tbnw=285&start=36&ndsp=24&tx=164&ty=96 46
https://www.facebook.com/photo.php?fbid=438805506154930&set=a.438803872821760.89053.17465 5532569930&type=3&theater 47
https://www.google.com.my/search?rlz=1C1LENN_enMY514MY514&q=mastermind%20tuition%20usj% 209&psj=1&biw=1366&bih=624&bav=on.2,or.r_cp.r_qf.&um=1&ie=UTF8&hl=en&tbm=isch&source=og&sa=N&tab=wi&ei=m997UZz0Bc_qrQem14DQDQ#imgrc=6qprzTK7qhaMM%3A%3BPrXgdZDByeiG6M%3Bhttps%253A%252F%252Fstatic.groupon.my%252F02%252F9 2%252F1346499059202.jpg%3Bhttp%253A%252F%252Fwww.groupon.my%252Fdeals%252Fklangvalley-kuala-lumpur%252FMastermind-Training-Academy%252F716596921%3B470%3B313 Page 58 of 76
Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
APPENDIX G: Interview with the tuition owners
https://www.google.com.my/search?q=usj%209%20business%20centre&rlz=1C1LENN_enMY514MY514 &aq=f&um=1&ie=UTF8&hl=en&tbm=isch&source=og&sa=N&tab=wi&ei=dNl7UdCiBo2lrQeWnIGgBA&biw=1366&bih=667&sei =2Nl7UdyfBInmrAeowoAw#um=1&rlz=1C1LENN_enMY514MY514&hl=en&tbm=isch&sa=1&q=tuisyen+ mawar&oq=tuisyen+mawar&gs_l=img.3..0i5j0i24l2.15594.16617.6.16896.6.6.0.0.0.0.170.695.2j4.6.0...0 .0...1c.1.11.img.cFnac9WAPx4&bav=on.2,or.r_cp.r_qf.&bvm=bv.45645796,d.bmk&fp=99abaef949b1a85 8&biw=1366&bih=667&imgrc=gTxc1lE8TFDBhM%3A%3BPiERYbM8gWkcFM%3Bhttp%253A%252F%252 Fwww.mawar.edu.my%252Fv2%252Fimages%252F1malaysia.png%3Bhttp%253A%252F%252Fwww.ma war.edu.my%252F%3B336%3B203 Page 59 of 76
Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
APPENDIX H: Complete price list GENERASI MUDA Std 1- Form 1 – RM50 each subject Form 2-3 RM60 each subject Form 4-5 RM70 each subject
GET A All subjects Std 5 –RM180 Std 6 – RM195 Ceramah RM200 F1 & F2 – RM180 F3- RM235 F4- RM185 F5- RM 220 KANCIL Page 60 of 76
Ahmad Kamal, Syanaz Bazil 000592-0049
Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
ERA TINTA Form 1-3 Each subject 55 Form 4-5 Each Subject 65 except RM 75 for Science Subjects SRI RESTU Form 5 Addmaths RM 90 Chemistry RM90 Physics RM90 Maths RM 90 Form 4 Addmaths RM90 Maths RM90 Physics RM90 Chemistry RM90 Form 3 Maths RM 80 Science RM80 Form 2 Maths RM70 Science RM70 Special Class 8 students per class Form 1 Science RM60 Maths RM60 Form 5 Biology RM120 Sejarah RM 120 Science RM 120 Form 4 Biology RM120 Sejarah RM120 Science RM 120 Form 1 & 2, PMR & SPM Bahasa Malaysia RM120 STC Level
Subject
Monthly Fees
Year 5
Bahasa Malaysia
1 Subject RM 50
Year 6 (UPSR)
(Pemahaman)
2 Subjects RM80
Bahasa Malaysia (Penulisan)
3 Subjects RM120 4 Subjects RM160
Form 1
Bahasa Malaysia, English,
1 Subject RM60
Form 2
Mathematics, Science,
2 Subjects RM90
Form 3 (PMR)
Sejarah, Geografi
4 Subjects RM 160
Package A: Bahasa+ 1 Subjek
6 Subjects RM190
Tambahan Page 61 of 76
Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
Package B: Bahasa Malaysia, English, Mathematics & Science Form 4
Bahasa Malaysia, English,
Form 5
Mathematics, Science,
1 Subject RM 60
Additional Mathematics, Physics, Chemistry, Prinsip Akaun, Perdagangan & Ekonomi
Revision Subject
1 Subject RM40
Basic Package + Literature
Bahasa Malaysia, English &
3 Subjects RM150
Package
Mathematics Additional Subjects Accounting Principles
1 Subject RM40
Business
2 Subjects RM 80
Economics
3 Subjects RM110 4 Subjects RM 140
Accounts Package A
Mathematics, Additional
3 Subject RM 150
Accounts Package B
Mathematics and Principles
3 Subjects RM150
of Accounting
1 Subject RM40 2 Subject RM80
Mathematics, Science & Principles of Accounting Additional Subject Additional Mathematics Science Science Package
Additional Mathematics,
1 Subject RM40
Physics & Chemistry
2 Subjects RM 80
Additional Subject
3 Subjects RM150
Page 62 of 76
Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Mathematics Principles of Accounting
TTC Subject
RM
1
70
2
140
3
180
4
220
5
260
6
300
7 and above
+35/subject
INISIATIF Primary school (6 subjects) Subject
RM
1
60
2
105
3
147
4
187
5
225
6
260
Secondary school (PMR)5 subjects Subject
RM
1
65
2
120
3
170 Page 63 of 76
Ahmad Kamal, Syanaz Bazil 000592-0049
Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
4
200
5
230
Subject
RM
1
65
2
120
3
170
4
215
5
255
6
285
7
315
Page 64 of 76
Ahmad Kamal, Syanaz Bazil 000592-0049
Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
APPENDIX I: TABULATED DATAS
Page 65 of 76
Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
Number of students this year
Number of enrolled per year
Elementary
In
Out
10++
10++
Varies
Varies
Name of tuition
Secondary
center Mawar STC
20
100
Get A Sri Restu
-
53
3-4
2
Kancil
60
240++
5-10
5-10
TTC
80
200++
5-30
5-10
Cu-A Mastermind Era Tinta Inisiatif Generasi Muda Sri Mawar Bestari
Page 66 of 76
Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
Tutorial Lee
Table 1: Entolment
Name of
Number
tuition
of
centre
teachers
Qualification Experience Salary of teachers
Offers
Price
Private
for
Class?
private class
hired Full
Packages?
Part
Time Time Mawar
Diploma and
20-50
above
Yes
Per subject
per class
STC 13
Sri Restu
-
2
Degree and
More than
above
6 years
Degree and
7
20
RM60
Per subject
per
per
and
class
hour
packages
-
Per subject
10-20 years RM2-
above Kancil
30-45
Yes
No
3K
Diploma and
5 years
above
2K-4K Yes
Per subject
VIP 9
and
per
packages
class TTC
15
Diploma,
4-10 years
No
-
Per subject
20-
Bachelors
and
25
and Masters
packages
. Cu-A
Page 67 of 76
Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
.Get A
Ahmad Kamal, Syanaz Bazil 000592-0049
No
Mastermind
Era Tinta
Per subject
Inisiatif
Generasi
1
2
Degree
At least 3
Muda
Yes
Yes
years
Sri Mawar Bestari Tutorial
-
9
Degree
5-20 years
Lee
Table 2: Product differentiation Name of tuition
Number of years
Name of tuition
centre
Number of years
centre
Mawar
Less than one year
Era Tinta
STC
15 years
Inisiatif
.Get A
5-10 years
Generasi Muda
Sri Restu
5 years
Sri Mawar Bestari
Kancil
13-14 years
Mastermind
Page 68 of 76
0-5 years
Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
TTC
2 years
Tutorial Lee
0-5 Years
Ahmad Kamal, Syanaz Bazil 000592-0049
. Cu-A
Table 3 : barriers to entry (experience)
Name of tuition
Startup Costs
Name of tuition
Startup Costs
centre
(approximation)(RM)
centre
(approximation) (RM)
Mawar
RM 80 000
Era Tinta
STC
RM 40 000
Inisiatif
.Get A
RM 60 000
Generasi Muda
Sri Restu
RM 70 000
Sri Mawar Bestari
Kancil
RM 150 000
Mastermind
TTC
. Cu-A
Tutorial Lee
Table 4: Barriers to entry: cost
Number of classes in the
Page 69 of 76
Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Name of
Set the price
tuition centre
according to
Mawar
Ahmad Kamal, Syanaz Bazil 000592-0049
centre
Number of students per class
Market price, as advised
10-15
by franchisor STC
Market Price
20-25
Get A
Quality of the lecturers
5
25-30
Sri Restu
Quality of the lecturers
3
15
Kancil
Market price (according 20
15
to the socioeconomic background) TTC
Market price
20
Era Tinta Inisiatif Generasi muda Sri
Market price
4
Market price
8
5-10
Mawar
Bestari Cu-A Tutorial Lee
Table 5 : Price setting
Subjects
Number of votes
Physics Additional Mathematics Page 70 of 76
Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
English Mathematics Additional Mathematics Biology Chemistry Sejarah Perakaunan Bahasa Melayu Ekonomi Asas Geografi
Table 6 : Subjects
Name of Van to send Activities with the Awards tuition
them to go to students
Recognition
centre
tuition
Ceremony
Mawar
Not available
& Amount of spent on marketing
Outdoor activities – Available to avoid stress and strengthen relationship
STC
Not available
.Get A
Not available
Sri Restu
Not available
Kancil
Available
Not available
Not Available
Activities
Available
Page 71 of 76
5000
Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
TTC
Available
Ahmad Kamal, Syanaz Bazil 000592-0049
400
. Cu-A
Mastermi nd
Era Tinta
Inisiatif
Generasi
3000
Muda
Sri Mawar Bestari
Tutorial Lee
Table 7: Non-price competition
Page 72 of 76
Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
APPENDIX J: BROCHURES
Page 73 of 76
Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
Appendix K: The number of primary and secondary schools in USJ Subang Jaya, Selangor Primary48
Sekolah Wawasan USJ 15 Sekolah Kebangsaan Dato Onn Jaafar Sekolah Jenis Kebangsaan (Cina) Tun Tan Cheng Lock Sekolah Jenis Kebangsaan (Cina) Tun Tan Siew Sin Sekolah Tun Sambathan Sekolah Kebangsaan Seafield 3 Sekolah Kebangsaan USJ 12 Sekolah Kebangsaan Seafield (USJ 6) Sekolah Kebangsaan USJ 2 Sekolah Jenis Kebangsaan (Cina) Chee Wen Sekolah Kebangsaan USJ 20 Sekolah Kebangsaan Seri Selangor USJ 4
Secondary
48
Sirius Scholar Study Skills (USJ Sentral) Fairview International School (Sime UEP Industrial Park) Sekolah Menengah Kebangsaan Seafield (USJ 2) Sekolah Menengah Kebangsaan USJ 8 Sekolah Menengah Kebangsaan USJ 12 Sekolah Menengah Kebangsaan USJ 13 Sekolah Menengah Kebangsaan USJ 23 Sekolah Menengah Kebangsaan USJ 4 Sekolah Agama Menengah Bestari USJ 5
http://en.wikipedia.org/wiki/UEP_Subang_Jaya
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Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Appendix L:
Page 75 of 76
Ahmad Kamal, Syanaz Bazil 000592-0049
Extended Essay Economics HL “To what extent are the tuition centres in Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil 000592-0049
Rankings
1
2
3
4
5
6
7
8
9
10
11
Quality(Reputation of the teacher)
75%
10%
5%
0%
0%
0%
0%
0%
10%
0%
0%
(45)
(6)
(3)
(0)
(0)
(0)
(0)
(0)
(6)
(0)
(0)
5%
55%
5%
15%
5%
0%
15%
0%
0%
0%
(0)
(0)
(0)
Price
0% (3)
(33)
(3)
(9)
(3)
(0)
(9) (0)
Student’s Preference
Brand loyalty
Services
Location
Reputation0
Just wanted to send them because it is a need
Facilities
Word of mouth
Availability of transport
5%
15%
30%
10%
15%
5%
0%
5%
0%
0%
15%
(3)
(9)
(18)
(6)
(9)
(3)
(0)
(3)
(0)
(0)
(9)
0%
5%
0%
30%
5%
5%
15%
0%
5%
15%
20%
(0)
(3)
(0)
(18)
(3)
(3)
(3)
(0)
(3)
(9)
(12)
5%
5%
10%
15%
30%
5%
0%
20%
5%
5%
0%
(3)
(3)
(6)
(9)
(18)
(3)
(0)
(12)
(3)
(3)
(0)
0%
0%
20%
15%
15%
30%
5%
10%
5%
0%
0%
(0)
(0)
(12)
(9)
(9)
(18)
(3)
(6)
(3)
(0)
(0)
0%
5%
5%
5%
15%
10%
40%
5%
10%
0%
5%
(0)
(3)
(3)
(3)
(9)
(6)
(24)
(3)
(6)
(0)
(0)
10%
0%
0%
0%
0%
10%
10%
40%
15%
10%
5%
(0)
(0)
(0)
(0)
(0)
(6)
(6)
(24)
(9)
(6)
(3)
0%
5%
0%
0%
10%
5%
5%
15%
35%
15%
10%
(0)
(3)
(0)
(0)
(6)
(3)
(3)
(9)
(21)
(9)
(6)
0%
0%
15%
5%
5%
15%
5%
5%
5%
40%
5%
(0)
(0)
(9)
(3)
(3)
(9)
(3)
(3)
(3)
(24)
(3)
0%
0%
10%
5%
0%
15%
5%
0%
10%
15%
40%
(0)
(0)
(6)
(3)
(0)
(9)
(3)
(0)
(6)
(9)
(24)
Table 1: Factors affecting the demand for tuition services (Percentage of each ranking)
Page 76 of 76
