As commissioner of a league of recreational tennis players, you are responsible for purchasing court time from

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As commissioner of a league of recreational tennis players, you are responsible for purchasing court time from the local tennis facility. The members of the league will tell you how many hours of court time they would like for you to purchase each month. Your job is to find the least expensive way of buying the required amount of court time. After researching the options, you have found that the tennis facility offers three plans from which you can choose: 

Plan A: Pay $15 per hour for court time at the facility, with no additional fees.
Plan B: Buy a Basic Membership to use the facility. Here you pay a membership fee of $100 per month, with an additional charge of $10 per hour of court time.
Plan C: Buy a Preferred Membership. This requires your league to pay a monthly fee of $250, with an additional charge of $5 for every hour of court time.

a) Which plan would you select if you are instructed to purchase 25 hours of court time at the lowest possible cost?
b) Which plan would you select if you are instructed to purchase 50 hours of court time at the lowest possible cost?
c) Is the number of hours of court time you purchase endogenous or exogenous? Explain.
d) Is the type of plan you purchase (A, B, or C) endogenous or exogenous? Explain.
e) Are your league’s total expenditures endogenous or exogenous? Explain.

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Microeconomics

ISBN: 9781119554844

6th Edition

Authors: David Besanko, Ronald Braeutigam

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