Consider a golf course where each golfer has an identical annual demand function P = 200 4Q, where P is price per round and Q is rounds per year. MC = AC = $8. Assume for simplicity that FC = 0.

a. What is the profit-maximizing single price the course should charge each golfer? What is the profit-maximizing level of output? Calculate profit per golfer.

b. Show that the monopolist can make more profit using a two-part tariff with P = MC. Solve for the fixed fee and profit per golfer.

c. Show that even a $1 increase in price (per round to $9) would cause profit per golfer to fall from the levels in problem b.