A local Pilates studio recently began offering a monthly subscription service for its patrons. Suppose a...

 

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A local Pilates studio recently began offering a monthly subscription service for its patrons. Suppose a particular patron at this studio has the following willingness-to-pay schedule, per session. Session Willingness to Pay 1st $105 2nd $90 3rd $75 4th $60 5th $45 6th $30 Suppose this consumer would not demand any more sessions, even for free. Also assume that the marginal cost to the studio, per session, is constant at $15. At a price of $82.50 per session, the number of sessions demanded by this consumer would be .At this price and quantity, consumer surplus is $ and producer surplus is $ Suppose the studio has devised a new pricing scheme for consumers who demand more than 1 session. This pricing scheme is a subscription service, whereby consumers can pay a flat fee of $303.75 and can have up to 6 sessions total. Using this subscription pricing model, this consumer would demand sessions. Under this scenario, consumer surplus is $ and producer surplus is $ (Hint: For consumer surplus, consider how much total value the consumer places on all sessions, versus the total price paid.) A local Pilates studio recently began offering a monthly subscription service for its patrons. Suppose a particular patron at this studio has the following willingness-to-pay schedule, per session. Session Willingness to Pay 1st $105 2nd $90 3rd $75 4th $60 5th $45 6th $30 Suppose this consumer would not demand any more sessions, even for free. Also assume that the marginal cost to the studio, per session, is constant at $15. At a price of $82.50 per session, the number of sessions demanded by this consumer would be .At this price and quantity, consumer surplus is $ and producer surplus is $ Suppose the studio has devised a new pricing scheme for consumers who demand more than 1 session. This pricing scheme is a subscription service, whereby consumers can pay a flat fee of $303.75 and can have up to 6 sessions total. Using this subscription pricing model, this consumer would demand sessions. Under this scenario, consumer surplus is $ and producer surplus is $ (Hint: For consumer surplus, consider how much total value the consumer places on all sessions, versus the total price paid.)

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