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You are the manager of a racquet club and you want to determine the best price for local rentals. Assume that the marginal cost of providing lockers is zero and the monthly demand for lockers is estimated to be best described as fitting the equation Q = 200 - 4P where P is the monthly rental price and Q is the number of lockers rented per month.

a. What price would you charge?

b. How many lockers would you rent monthly at this price?

c. Explain why you chose this price?

d. Did you rent all the lockers you have in the racquet club?

e. If you did not rent all the lockers you have, why didn't you seek to develop a pricing strategy which might rent all you have?

f. Would you answer to (e) cause any problems? If so, what kinds of problems?

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M9689639

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