A local Pilates studio recently began offering a monthly subscription servlce for Its patrons.Suppose a particular patron at this studio has the following willingness-to-pay schedule, per sesslon.Sessionwillingness to Pay1st$772nd$663rd$554th$445th$336th$22Suppose this consumer would not demand any more sesslons, even for free. Also assume that the marginal cost to the studlo, per sesslon, is constantat $11.At this price and quantity, consumer surplusAt a price of $71.50 per sesslon, the number of sesslons demanded by this consumer would beIsand producer surplus isSuppose the studio has devised a new pricing scheme for consumers who demand more than 1 sesslon. This pricing scheme is a subscription service,whereby consumers can pay a flat fee of $237.60 and can have up to 6 sesslons total.Using this Eubscription pricing model, this consumer would demandsessions. Under this scenarlo, consumer surplus Isand producer surplus is(Hint: For consumer surplus, consider how much total value the consumer placeson all sessions, versus the total price pa d.)

Consumer surplus is the difference between the willingness to pay by the consumer and the actual…

Suppose this consumer would not demand any more sessions, even for free. Also assume that EHe at $11. At this price and quantity, consumer surplus At a price of $71.50 per session, the number of sessions demanded by this consumer would be Is and producer surplus is Suppose the studio has devised a new pricing scheme for consumers who demand more than 1 sesslon. This pricing scheme is a subscription service, whereby consumers can pay a flat fee of $237.60 and can have up to 6 sesslons total. Using this subscription pricing model, this consumer would demand sessions. Under this scenarlo, consumer surplus Is and producer surplus is (Hint: For consumer surplus, consider how much total value the consumer places on all sessions, versus the total price pa d.)

Suppose this consumer would not demand any more sessions, even for free. Also assume that EHe at $11. At this price and quantity, consumer surplus At a price of $71.50 per session, the number of sessions demanded by this consumer would be Is and producer surplus is Suppose the studio has devised a new pricing scheme for consumers who demand more than 1 sesslon. This pricing scheme is a subscription service, whereby consumers can pay a flat fee of $237.60 and can have up to 6 sesslons total. Using this subscription pricing model, this consumer would demand sessions. Under this scenarlo, consumer surplus Is and producer surplus is (Hint: For consumer surplus, consider how much total value the consumer places on all sessions, versus the total price pa d.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Pricing

Pricing is used as a term in finance and economics, pricing is the process of fixing a value for a product or a service. Pricing establishes a value for a product or service that the customer has to pay. A business can choose from different strategies while deciding to set prices.

Question

A local Pilates studio recently began offering a monthly subscription servlce for Its patrons.
Suppose a particular patron at this studio has the following willingness-to-pay schedule, per sesslon.
Session
willingness to Pay
1st
$77
2nd
$66
3rd
$55
4th
$44
5th
$33
6th
$22
Suppose this consumer would not demand any more sesslons, even for free. Also assume that the marginal cost to the studlo, per sesslon, is constant
at $11.
At this price and quantity, consumer surplus
At a price of $71.50 per sesslon, the number of sesslons demanded by this consumer would be
Is
and producer surplus is
Suppose the studio has devised a new pricing scheme for consumers who demand more than 1 sesslon. This pricing scheme is a subscription service,
whereby consumers can pay a flat fee of $237.60 and can have up to 6 sesslons total.
Using this Eubscription pricing model, this consumer would demand
sessions. Under this scenarlo, consumer surplus Is
and producer surplus is
(Hint: For consumer surplus, consider how much total value the consumer places
on all sessions, versus the total price pa d.)

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