Question
The cambridge Port Health club offers all kinds of activites including yoga and aerobic classes, weight cardio machines, as well as pool and squash courts.
The cambridge Port Health club offers all kinds of activites including yoga and aerobic classes, weight cardio machines, as well as pool and squash courts.
its demand function is Q=11-0.5P, and its cost function is C(Q)=2Q
The club currently charges a $12 fee per visit, but it feels that it can increase its profit by adopting a two-part pricing strategy, where it charges a fixed per-month membership fee, plus a low per-visit fee equal to the company's marginal cost.
a. what should be the amount of the membership fee, assuming that this fee is equal to the entire consumer surplus?
b. what should be the amount of the low per-visit fee?
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