Question
There are two types of golfers, frequent and infrequent. Frequent golfers' annual demand for rounds of golf is given by =240.3Qf=240.3P, where P is the
There are two types of golfers, frequent and infrequent. Frequent golfers' annual demand for rounds of golf is given by =240.3Qf=240.3P, where P is the price of a round of golf. In contrast, infrequent golfers' annual demand for rounds of golf is given by =100.1QI=100.1P. The marginal and average total cost of providing a round of golf is $20.
Suppose that the golf course decides to only sell bundles of rounds of golf instead of individual rounds.
Plan A: Eight rounds of golf for a certain overall price.
Plan B: 18 rounds of golf at a higher overall price.
Under this scheme, the owners would design A and B such that frequent golfers will self-select into Plan B, and infrequent golfers will choose Plan A. (Importantly, only bundles will be offered. It will not be possible to purchase single rounds of golf.)
What is the price of the bundle offered in Plan A? Show your work.
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