b) The manager could have charged Joe a single price per round. How much extra profit does theclub earn by using two-part pricing?c) Joe marries Susan, who is also an enthusiastic golfer. Susan wants to join the Northlands Club.The manager believes that Susan’s inverse demand function is ? = 100 − 2?. The manager has apolicy of offering each member of a married couple the same two-part prices, so he offers themboth a new deal. What two-part pricing deal maximizes the club’s profit?d) Will this new pricing have a higher or lower access fee and per-unit fee than in Joe’s originaldeal? How much more would the club make if it charged Susan and Joe separate prices? =2. Joe has just moved to a small town with only one golf course, the Northlands Golf Club. His inversedemand function is p: 120 - 2q, where q is the number of rounds of fold that he plays per year.The manager of the Northlands Club negotiates separately with each person who joins the club andcan therefore charge individual prices. This manager has a good idea of what Joe's demand curve isand offers Joe a special deal whereby Joe pays an annual membership fee and can play as manyrounds as he wants at $20, which is the marginal cost his round imposes on the club.a) What membership fee would maximize profit for the club?

Joe's Demand function : p = 120 - 2q MC of rounds = 20 In two part tariff monopoly charges a per…

Answered: Joe has just moved to a small town with…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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b) The manager could have charged Joe a single price per round. How much extra profit does the
club earn by using two-part pricing?
c) Joe marries Susan, who is also an enthusiastic golfer. Susan wants to join the Northlands Club.
The manager believes that Susan’s inverse demand function is ? = 100 − 2?. The manager has a
policy of offering each member of a married couple the same two-part prices, so he offers them
both a new deal. What two-part pricing deal maximizes the club’s profit?
d) Will this new pricing have a higher or lower access fee and per-unit fee than in Joe’s original
deal? How much more would the club make if it charged Susan and Joe separate prices?

=
2. Joe has just moved to a small town with only one golf course, the Northlands Golf Club. His inverse
demand function is p: 120 - 2q, where q is the number of rounds of fold that he plays per year.
The manager of the Northlands Club negotiates separately with each person who joins the club and
can therefore charge individual prices. This manager has a good idea of what Joe's demand curve is
and offers Joe a special deal whereby Joe pays an annual membership fee and can play as many
rounds as he wants at $20, which is the marginal cost his round imposes on the club.
a) What membership fee would maximize profit for the club?

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