The Northwind Golf Club (NGC) uses two part pricing. It must charge the same access fee and per-unit fee to each customer. Suppose that Dick has an…
The Northwind Golf Club (NGC) uses two part pricing. It must charge the same access fee and per-unit fee to each customer. Suppose that Dick has an inverse demand function given by p = 11 – q. Jane has an inverse demand curve given by p = 7 – q. Marginal cost is 1 and fixed cost is 0. If all potential customers had the same demand function as Dick and NGC used profit-maximizing two-part pricing it would earn a profit of _____ per customer. If all potential customers had the same demand function as Jane, NGC would earn profit of _____ per customer. If NGC had 40 potential customers with a demand function like Dick’s and 20 with a demand function like Jane’s, it would earn a profit of _____ . (Hint: Consider whether NGC wants to sell to both customer types.)
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