Answered: You have just been hired as manager of…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

You have just been hired as manager of a new health spa in Retirement
Village, Florida. The owner has commissioned a market study that estimates the average customer’s monthly demand curve for visiting the health
spa to be Q = 50 − 0.25P. The cost of operating is T C = 3Q, where
Q is the number of visits. The owner has been charging a $20 per-month
membership fee and a $5 per-visit fee. Part of your salary is 10 percent of
the monthly profits. Suggest a pricing strategy that will increase your salary

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Where did the numbers come from for this part?

And the membership fee will be equal to the consumer surplus, that will be:

5$200-$349.25=$4,851

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