Big Waves is a large water park. Suppose the individual demand for entrance into Big Waves is Qd = 50 - (2 × P)and each consumer has the same demand. Big Waves has a constant marginal cost of
$5 per consumer. If Big Waves practices two- part pricing and charges the profit-maximizing membership fee and entrance fee, what is the profit per consumer?
A)$400
B)$200
C)$500
D)$50

Question

Quizplus · Accepted Answer

The profit-maximizing membership fee is $200, and the entrance fee is $50. The profit per consumer is $200 + $50 - $5 = $245.

Big Waves Is a Large Water Park