golf club has determined that its local community has two broad groups of consumers: casual golfers and serious golfers. The golf club plans to charge golfers both a monthly membership fee (F) and a price (P) for each round of golf played. The club has estimated the following details for each consumer group, where P represents the price per round of golf and Q represents the number of rounds played each month. There are 25 serious golfers and each serious golfer has a direct demand of Qs(Ps)=190−2Ps. There are 60 casual golfers and each casual golfer has a direct demand of Qc(Pc)=152−2Pc. The marginal cost associated with each round is equal to $20. Ignore fixed costs. Assume that this golf club cannot price discriminate and
golf club has determined that its local community has two broad groups of consumers: casual golfers and serious golfers. The golf club plans to charge golfers both a monthly membership fee (F) and a price (P) for each round of golf played. The club has estimated the following details for each consumer group, where P represents the price per round of golf and Q represents the number of rounds played each month. There are 25 serious golfers and each serious golfer has a direct demand of Qs(Ps)=190−2Ps. There are 60 casual golfers and each casual golfer has a direct demand of Qc(Pc)=152−2Pc. The marginal cost associated with each round is equal to $20. Ignore fixed costs. Assume that this golf club cannot price discriminate and
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A golf club has determined that its local community has two broad groups of consumers: casual golfers and serious golfers. The golf club plans to charge golfers both a monthly membership fee (F) and a price (P) for each round of golf played. The club has estimated the following details for each consumer group, where P represents the price per round of golf and Q represents the number of rounds played each month.
There are 25 serious golfers and each serious golfer has a direct demand of Qs(Ps)=190−2Ps.
There are 60 casual golfers and each casual golfer has a direct demand of Qc(Pc)=152−2Pc.
The marginal cost associated with each round is equal to $20.
Ignore fixed costs. Assume that this golf club cannotprice discriminate and must charge one price (P) and one membership fee (F). We will now determine whether it is more profitable for the golf club to select its prices based on the preferences of casual golfers or on the preferences of serious golfers.
Ignore fixed costs. Assume that this golf club cannot
For the next two parts, assume that the golf club is basing its prices on the preferences of casual golfers. Assume that both serious and casual golfers participate in the market. Hint: you should need to set up a profit-maximization problem.
Determine the profit-maximizing price (P) that the golf club will use.
Price (P):
Determine the membership fee (F) that the golf club will use.
Membership fee (F):
Determine the profits that the golf club will receive.
Determine the profits that the golf club will receive.
Profits:
(Enter your answer rounded to two decimal places).
(Enter your answer rounded to two decimal places).
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