1.7. You are the manager of a gym, and you have to decide how many customers to admit each hour. Assume that each customer stays exactly one hour. Customers are costly to admit because they inflict wear and tear on the exercise equipment.

Moreover, each additional customer generates more wear and tear than the customer before. As a result, the gym faces increasing marginal cost. The accompanying table shows the marginal costs associated with each number of customers per hour.

a. Suppose that each customer pays $15.25 for a one-hour workout. Use the principle of marginal analysis to find the optimal number of customers that you should admit per hour.

b. You increase the price of a one-hour workout to $16.25.
What is the optimal number of customers per hour that you should admit now?

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Quantity of customers per hour Marginal cost of customer 0 $14.00 1 14.50 2 15.00 3 15.50 4 16.00 5 16.50 6 17.00 7