To enhance their prestige, some country clubs like to point to the fact that they have a waiting list for new members. Even at clubs with high initiation fees, it is common that prospective members have to wait three or more years before there is room for them on the membership rolls. How do these country clubs set the price of membership to ensure that they have a waiting list?
A) Set the membership price above the market clearing price.
B) Set the membership price below the market clearing price.
C) Set the price so that the quantity supplied of memberships exceeds the quantity demanded.
D) Set the price at a level that will generate a surplus of memberships.

Question

Quizplus · Accepted Answer

Setting the membership price below the market clearing price creates excess demand, resulting in a waiting list.

To Enhance Their Prestige, Some Country Clubs Like to Point