A golf-course operator must decide what greens fees (prices) to set on rounds of golf. Daily demand during the week is: PD = 36 - QD/10 where QD is the number of 18-hole rounds and PD is the price per round. Daily demand on the weekend is: PW = 50 - QW/12. As a practical matter, the capacity of the course is 240 rounds per day. Wear and tear on the golf course is negligible.
a. Can the operator profit by charging different prices during the week and on the weekend? Explain briefly. What greens fees should the operator set on weekdays, and how many rounds will be played? On the weekend?
b. When weekend prices skyrocket, some weekend golfers choose to play during the week instead. The greater the difference between weekday and weekend prices, the greater is the number of these “defectors.” How might this factor affect the operator’s pricing policy? (A qualitative answer will suffice.)