Question

Consider a golf club in a small town that charges customers both a per-round price (P) and a club membership fee (F). Its management has estimated that there are 10 serious golfers (S) and 40 casual golfers (C). The estimated direct demand curves for each type of golfer is as follows:

Serious golfer: Q s = 120 − 2 P

Casual golfer: Q c = 80 − 2 P

The fixed costs of providing a round of golf are negligible and the marginal costs are equal to $10.

If the club sets its prices based on the preferences of the serious golfer, what are the profit-maximizing per-round price and membership fee?

If the club sets its prices based on the preferences of the casual golfer, what are the profit-maximizing per-round price and membership fee?

Answer #1

Consider a golf club in a small town that charges customers both
a per-round price (P) and a club membership fee (F). Its management
has estimated that there are 10 serious golfers (S) and 40 casual
golfers (C). The estimated direct demand curves for each type of
golfer is as follows:
Serious golfer: Q s = 120 − 2 P
Casual golfer: Q c = 80 − 2 P
The fixed costs of providing a round of golf are negligible...

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Round all calculations to 2 decimals

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Table 17-19 Consider a small town that
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2
Low Price
High Price
Store
1
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(250,
250)
(400,
50)
High Price
(50,...

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21. The “prisoner’s dilemma” facing a cartel is that
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B) the production level that is best for a self-interested firm
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1. The failure of the new supply chain system affected Nike
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