A private golf club has two types of members. Serious golfers each have the dema

Question

A private golf club has two types of members. Serious golfers each have the demand curve Q=350-10p, where Q represents the number of rounds played per year and P is the per-round price. Casual golfers have the demand curve 100-10p. The club has 10 serious and 100 casual golfing members and faces a constant marginal cost of 5$ per round played by either type of member. If the club can engage in third-degree price disrimination, what prices should it charge to the two types of members? Also, suppose that the club can employ a two part pricing scheme but must charge all members the same annual membership (entry) fee. What entry fee and per-round price should the club charge?

Explanation / Answer

By equating each groups marginal revenue with $5 (MC), the club should charge the serious

members $20 and the casual members $7.50.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.