Monopoly fitness centre in a small town

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Reference no: EM132151467

Consider a profit-maximizing monopoly fitness centre in a small town. The firm uses two part pricing. Customers pay a monthly membership fee and also pay $p per hour when they use the club. Assume all customers are identical. Which of the following statements is true?

A. Because the fitness centre has market power it will charge a per hour fee, p, that exceeds marginal cost.

B. The fitness centre should charge different membership fees to different customers.

C. Both A and B.

D. None of the above.

Reference no: EM132151467

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