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Berkley Golf and Tennis Club offers golf and tennis memberships. Marketing analysis of the local neighborhood served by the Club shows that there are two types of families that might join the club: golf-oriented families, which are primarily interested in playing golf but enjoy playing some tennis, and tennis-oriented families that are primarily interested in tennis but enjoy playing some golf. The study further estimates that there are 400 golf-oriented families and 300 tennis-oriented families in the neighborhood, and the estimated demand prices for gold and tennis memberships by family type are given below. There is no way to identify family types for pricing purposes, and all costs are fixed so that maximizing total revenue is equivalent to maximizing profit.

Demand Prices for Gold and Tennis Memberships

Type of Family................Golf Membership Only...............Tennis Memberships Only

Golf-oriented............................$250......................................................$100
Tennis-oriented............................50........................................................200

If Berkeley Golf and Tennis Club decides to bundle the memberships, what price should it charge for the bundled membership?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M975908

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