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.Forecasted demand 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 for Golf and Tennis Memberships $$\begin{array} { | l | l | l | }
\hline \text { Type of family } & \begin{array} { l }
\text { Tennis } \
\text { membership only }
\end{array} & \begin{array} { l }
\text { Golf membersh? } \
\text { only }
\end{array} \
\hline \text { Tennis-oriented } & \$ 150 & \$ 50 \
\hline \text { Golf-oriented } & \$ 75 & \$ 200 \
\hline
\end{array}$$ How much revenue will the optimal bundled price produce for Black Diamond Tennis & Golf Club?

Question

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.Forecasted demand 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 for Golf and Tennis Memberships $$\begin{array} { | l | l | l | } 
\hline \text { Type of family } & \begin{array} { l } 
\text { Tennis } \
\text { membership only }
\end{array} & \begin{array} { l } 
\text { Golf membersh? } \
\text { only }
\end{array} \
\hline \text { Tennis-oriented } & \$ 150 & \$ 50 \
\hline \text { Golf-oriented } & \$ 75 & \$ 200 \
\hline
\end{array}$$ How much revenue will the optimal bundled price produce for Black Diamond Tennis & Golf Club?

Quizplus · Accepted Answer

To maximize revenue, the club should bundle the memberships at a price that both family types are willing to pay. The total willingness to pay for both memberships by each family type is $200 for tennis-oriented families ($150 for tennis + $50 for golf) and $275 for golf-oriented families ($75 for tennis + $200 for golf). The optimal bundled price would be set at the lower total willingness to pay, which is $200, to ensure that all families are willing to buy the bundle. With 200 families in total (100 golf-oriented + 100 tennis-oriented), the revenue would be 200 families * $200 = $40,000.

Black Diamond Tennis & Golf Club Offers Golf and Tennis