Reference no: EM1368263
Black Diamond Tennis & Golf Club offers golf and tennis memberships to the residents of Black Diamond, Ohio, in which there are two types of families: golf-oriented families and tennis-oriented families. There are 100 golf-oriented families and 100 tennis-oriented families in Black Diamond. Demand forecasts at prices for golf 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 (willingness to pay) for Golf and Tennis Memberships
Type of family Tennis membership only Golf membership only
Tennis-oriented $150 $50
Golf-oriented $75 $200
1-If Black Diamond Tennis & Golf Club plans to offer golf and tennis memberships separately, what prices should be charged for each kind of membership if Berkely wishes to maximize profit?
Answer
Charge $75 for tennis memberships and $50 for golf memberships.
Charge $75 for tennis memberships and $200 for golf memberships.
Charge $150 for tennis memberships and $200 for golf memberships.
Charge $150 for tennis memberships and $50 for golf memberships.
either b or c
2-How much total revenue can be generated each month under the pricing plan in the previous question?
Answer
$20,000
$25,000
$35,000
$70,000
$95,000
3-The conditions are right for bundle pricing to increase profit at Black Diamond Tennis & Golf Club because
Answer
Demand prices for golf are greater than demand prices for tennis.
Demand prices differ across family types for tennis and golf memberships.
Demand prices are negatively correlated.
Demand prices are positively correlated.
Both b and c
4-What is the optimal price to charge for a bundled tennis and golf and tennis membership?
Answer
$150
$200
$225
$250
$275
5-How much revenue will bundle price in the previous question produce for Black Diamond Tennis & Golf Club?
Answer
$25,000
$27,500
$35,000
$40,000
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