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Suppose the demand and marginal cost at a local golf course is given by:
P = 200 - 4Q
MC = $8.
Assume there are no fixed costs and that the above demand and marginal cost are identical for each golfer.
a. If the golf course uses a two-part tariff (price and a fixed fee) what is the optimal price and fixed fee? What is the golf course's profit?
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Several years ago, James Todd Smith (a/k/a LL Cool J) performed at the United Center. General admission tickets were priced at $32. Concert promoters say that price elasticity of demand for general admission concert tickets was -1.6(i.e. E(P)= -1.6).
To carry out an optimization? analysis:
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