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Early Mountain Vineyard has decided to start a wine club. The way the club will work is that members will pay a membership fee (T)
Early Mountain Vineyard has decided to start a wine club. The way the club will work is that members will pay a membership fee (T) to join, and then they can purchase wine at a price of p per bottle. Early Mountain faces two types of potential customers: connoisseurs (C) who are obsessed with wine, and regular customers (R) who drink wine less frequently. There are NC = 200 connoisseurs and NR = 200 regular customers. Assume that Early Mountain can produce wine for free, so its marginal cost is MC = 0. Finally, assume that each connoisseur's demand for wine is QC = 40 P, and each regular customer's demand for wine is QR = 20 1 2P. (a) If Early Mountain were to only focus on serving the connoisseurs, what membership fee and price would they set? Justify your answer, either using math, graphs, or by explaining the logic behind your result
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