A golf club has determined that its local community has two broad groups of consumers: casual golfers
Question:
A golf club has determined that its local community has two broad groups of consumers: casual golfers and serious golfers.
The golf club plans to charge golfers both a monthly membership fee (F) and a price (P) for each round of golf played. The club has estimated the following details for each consumer group, where P represents the price per round of golf and Q represents the number of rounds played each month.
There are 30 serious golfers and each serious golfer has a direct demand of Qs(Ps)=190−2Ps.
There are 68 casual golfers and each casual golfer has a direct demand of Qc(Pc)=114−2Pc.
The marginal cost associated with each round is equal to$15.
Ignore fixed costs. Assume that this golf club cannot price discriminate and must charge one price (P) and one membership fee (F). We will now determine whether it is more profitable for the golf club to select its prices based on the preferences of casual golfers or on the preferences of serious golfers.
Assume that the golf club is basing its prices on the preferences of casual golfers. Assume that both serious and casual golfers participate in the market. Hint: you should need to set up a profit-maximization problem.
Determine the profit-maximizing price (P) that the golf club will use.
Price (P):26.63
Determine the membership fee (F) that the golf club will use.
Membership fee (F):922.34
Determine the profits that the golf club will receive.
Profits: 186133.53
Business Law The Ethical Global and E-Commerce Environment
ISBN: 978-0071317658
15th edition
Authors: Jane Mallor, James Barnes, Thomas Bowers, Arlen Langvardt