Swirl Pool is a local water park. Suppose the individual demand for admission into Swirl Pool is P = 25 - 0.5Q and each consumer has the same

demand. This would make the marginal revenue curve equal to MR = 25 - Q. Let's assume that Swirl Pool has a constant marginal cost of $5 per

consumer.

(Question A)

Suppose Swirl Pool decides to charge a single price for entry. What would be the profit maximizing price?

(Question B)

Under the single-price model, what would be the profit per consumer?

(Question C)

Now suppose Swirl Pool decides to adopt a two-part pricing strategy, which requires an annual membership fee and then a separate entrance fee.

What would be the profit-maximizing membership fee and entrance fee

(Question D)

Under the two-part pricing model, what would be the profit per consumer?

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