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Drumpf Country Club has the only golf course in Distopia. The (annual) demand to play a round of golf on its course is given by
Drumpf Country Club has the only golf course in Distopia. The (annual) demand to play a round of golf on its course is given by D (p) = 12000-10p where D (p) is the number of rounds demanded each year if Drumpf charged a uniform price of p per round. The marginal cost of having someone play a round of golf is zero and the annual (fixed) cost of maintaining the golf course is 1000000. For the rest of this question assume that instead of all golfers being identical, there are two types of golfers, tragics and dilettantes. There are fifty of each type and the demand of a tragic is given by xT(p) = 160-p/10 , while that of a dilettante is given by xD(p) = 80-p/10 . Unfortunately for Drumpf, it is not possible to tell beforehand whether a golfer is of either type. Explain to Drumpf how it can still have the same aggregate demand for rounds of golf but get more from the tragics if it offers different classes of memberships that entitles a golfer to play different amounts of rounds of golf for the different classes. [Hint: consider a standard membership that allows a golfer
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