3. The Royal Vancouver Yacht Club (RVYC) is one of the finest and most exclusive yacht clubs in the world.Located in the Kitsilano neighbourhood, it has a great location with a short drive from downtown Vancouver and is between Burrard Inlet and English Bay.The RVYC offers an array of services like a clubhouse for meetings, weddings and other social events, fine dining, regattas, sailing lessons and boat maintenance services.However, the RVYC's core service is to rent boat berths (a.k.a. parking spaces) where boat owners can store/leave their boat on the water.The RVYC has a capacity of 2,000 berths.

The RVYC is a non-profit organization with a volunteer board of directors, comprised of club members, but is managed by professional staff.An English expatriate, Sir William Wigglesworth (Esquire), is the general manager of the RVYC.The board has tasked him with maximizing the club's revenues to ensure its financial stability while minimizing member costs.

a) Currently, the RVYC is charging an annual price of $2,500 per berth and rents out all 2,000 berths.Wigglesworth is considering increasing the price to $3,000 per year.Wigglesworth has hired West Coast Economics Consultants (WCEC) to provide research and a recommendation to RVYC.WCEC has completed survey research of members that increasing the price to $3,000 per year will reduce the number of berths rented to 1,500 berths.

Using the 'mid-point' method, calculate the elasticity of RVYC members on the price of berths.Calculate your final answer to two decimals.What type of elasticity formula did you use?What type of elasticity do RVYC members have? Why?

b) You are the WCEC analyst assigned to the RVYC file. Given the information in a), do you recommend or not recommend that Wigglesworth increase the price of berths at RYVC? Why or why not? Hint: what is the impact on revenues with the type of elasticity found in a)? Show your calculations and explain your answer fully. (5 marks)

c) Your research on this topic also included an examination of income trends for high income, yachting enthusiasts. This group includes current members of the RVYC plus other wealthy individuals in the Greater Vancouver area. Your research reveals two things. (1) the Income Elasticity of Demand for this group of people is 2.0; and (2) the incomes of this group are expected to increase 10 per cent over the next year.

Given this research, do you continue with the same recommendation to increase the price from $2,500 per berth to $3,000 per berth or not you provided in part b) or do you change your recommendation? Why or why not? What type of good are berth rentals? What happens to the demand for berth rentals and the number of berths rented as a result?

Hint: calculate the impact on revenues with the type of elasticity found in c). Assume you're starting from the outcome in part b) after raising the price to $3,000 per berth. Show your calculations and explain your answer fully. (5 marks)

d) Draw the supply and demand graph for the RVYC in the graphing space below. Make sure to include all of the relevant information from parts a) - c). You must label all of the curves and axes completely to receive full marks. Use numbers from the previous parts to label the graph. Hint: there is a special shape of the supply curve for RVYC. (5 marks)