Question suppose a gym faces inverse demand pqi a

Economics

Question: Suppose a gym faces inverse demand p(qi) = a - bqi from each of N identical customers, and costsrepresented by C(Q) = cQ. Without competition, this would imply that

qi = (a- c)/2b , and p = (a+c)/2 .

The is one contract the gym o?ers.

There is another contract available, though, where the client agrees to give the gym a sum of money,F, out of which the gym would then pay clients f dollars for each workout. What does this secondoption look like? (That is, what are the optimal F and f?)

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M93125218

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