Question

As the owner of the only tennis club in an isolated wealthy community, you must decide on membership dues and fees for court time. There are two types of tennis players. "Serious" players have demand Upper Q 1 equals 10 minus Upper PQ1=10−P where Q1 is court hours per week and P is the fee per hour for each individual player. There are also "occasional" players with demand Upper Q 2 equals 4 minus 0.25 Upper PQ2=4−0.25P Assume that there are 1 comma 0001,000 players of each type. Because you have plenty of courts, the marginal cost of court time is $00. You have fixed costs of $15 comma 00015,000 per week. Serious and occasional players look alike, so you must charge them the same prices. a. Suppose that to maintain a "professional" atmosphere, you want to limit membership to serious players. How should you set the annual membership dues and court fees (assume 52 weeks per year) to maximize profits, keeping in mind the constraint that only serious players choose to join? What would profits be (per week)?  (round your answers to two decimal places)

Answer 1