An econometrician hired to analyse a local golf course has determined that there are two types of golfers, the regular and the occasional. The annual demand for games from regular players is given by QH = 24 -0.3P, where P is the price of a round of golf. On the other hand, the annual demand for occasional items is given by Q° = 10 - 0.1P. The marginal cost and the average total cost per item are equal to €20. a) If you could distinguish between regular and casual players, what price would be set for each type? How many games would each type of player play? How much profit could the golf course generate? Represent graphically. b) As an alternative to the discrimination of third degree prices, those in charge consider a double tranche rate according to which the members can play as many games as they wish at a price of € 20 per game. How much profit will the golf course generate if it charges all players the same annual fee for becoming a member of the club? What if you set a differentiated quota for each type of player? From the point of view of social welfare, which of the two options (same quota or differentiated quotas) would be preferable? Represent graphically. c) The field managers admit to having difficulties in distinguishing the usual players from the occasional ones so they decide not to charge the fee and set a single price for all players. Should they keep the price of €20 per item or, alternatively, set the price that a non-discriminatory monopolist would set? What would be the irrecoverable loss of efficiency that would be generated in the latter case? Represent graphically. (Goolsbee, Levit and Syverson, Microeconomía, 2015, Cap. 10, problema 11)
An econometrician hired to analyse a local golf course has determined that there are two types of golfers, the regular and the occasional. The annual demand for games from regular players is given by QH = 24 -0.3P, where P is the price of a round of golf. On the other hand, the annual demand for occasional items is given by Q° = 10 - 0.1P. The marginal cost and the average total cost per item are equal to €20. a) If you could distinguish between regular and casual players, what price would be set for each type? How many games would each type of player play? How much profit could the golf course generate? Represent graphically. b) As an alternative to the discrimination of third degree prices, those in charge consider a double tranche rate according to which the members can play as many games as they wish at a price of € 20 per game. How much profit will the golf course generate if it charges all players the same annual fee for becoming a member of the club? What if you set a differentiated quota for each type of player? From the point of view of social welfare, which of the two options (same quota or differentiated quotas) would be preferable? Represent graphically. c) The field managers admit to having difficulties in distinguishing the usual players from the occasional ones so they decide not to charge the fee and set a single price for all players. Should they keep the price of €20 per item or, alternatively, set the price that a non-discriminatory monopolist would set? What would be the irrecoverable loss of efficiency that would be generated in the latter case? Represent graphically. (Goolsbee, Levit and Syverson, Microeconomía, 2015, Cap. 10, problema 11)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
100%
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 1 images
Follow-up Questions
Read through expert solutions to related follow-up questions below.
Follow-up Question
b) As an alternative to the discrimination of third degree prices, those in charge consider a double tranche rate according to which the members can play as many games as they wish at a
Solution
by Bartleby Expert
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education