Suppose Silverado Golf Club in the previous problem also has a second group of 1
ID: 1164765 • Letter: S
Question
Suppose Silverado Golf Club in the previous problem also has a second group of 140 identical golfers, weekend players, who wish to play at the club. The demand for rounds of golf by each one of the 140 identical weekend golfers is given by DWK in the figure below. Assume the same cost structure as given in the previous problem. The manager designs an optimal two-part pricing plan for these two groups of golfers.
The optimal green fee to set for each round of golf is $37.50.
The club wants to charge identical annual membership fees to the seniors and weekend golfers. The optimal annual membership charge is $________ for senior golfers and for weekend golfers. Explain how you determined this value.
Under this two-part pricing plan, Silverado’s annual profit is $________.
125 WA 25 SMC-AVC 250 Quantity (rounds per year)Explanation / Answer
Equilibrium Quantity ; P =MC
125 - 0.5Q = 25
0.5Q = 100
Q = 100 /0.5
= 200
P = 25
Membership fee = 0.5 ( 125 -25) (200)
= 0.5(100)(100)
= 0.5*10,000
= $ 5,000
Profit = 5000 + 200*25 - 200*25
= $ 5,000
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