Answered step by step
Verified Expert Solution
Link Copied!
Question
1 Approved Answer

A local Pilates studio recently began offering a monthly subscription service for its patrons. Suppose a particular patron at this studio has the following

 

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.)

Step by Step Solution

3.53 Rating (156 Votes )

There are 3 Steps involved in it

Step: 1

anginal cont Mc 1s willingmen to he consumer will till the ... blur-text-image
Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Economics

Authors: Luke M. Froeb, Brian T. McCann, Michael R. Ward

5th Edition

1337106666, 978-1337106665

More Books

Students explore these related Economics questions