The market demand curve for basketball lessons in Harlem, NY is given by:

Q=1,000-20P

where Q is the number of overall lessons per week and P is the price for each lesson. There is a large number of (identical) basketball coaches who all face the same, constant marginal costs of $10 per hour.Each lesson is one hour long. The coaches face no fixed costs, and the gyms are available for free.

For now, suppose that the coaches compete for lessons, and they do not coordinate with each other.

A. (2 points)What is the price of a lesson and the quantity of lessons booked per week?

B. (3 points)Compute the consumer surplus of people booking lessons (per week). Show graphically which area the consumer surplus reflects (this does not need to be scaled correctly - just a sketch with appropriately labeled lines and axes is sufficient).

Now suppose that all tennis coaches in Venice form an association, and they now coordinate on pricing. The cost per lesson is unchanged.

C. (4 points) What is the profit-maximizing price per lesson that the coaches association should charge? What is the corresponding number of lessons that will be booked each week in total?

D. (4 points)Compute the consumer surplus of people booking basketball lessons (per week) under this new pricing. What is the deadweight loss? Show graphically which area the consumer surplus and deadweight loss reflect (as before, this does not need to be scaled correctly - just a sketch with appropriately labeled lines and axes is sufficient).

E. (3 points) The city now introduces a weekly fee of $5,000 that the coaches association has to pay for the use of the gym (independent of how many lessons are being offered). How does this fee affect the price per lesson that the association charges? Should the association continue to offer lessons in the long run?