Figure 16-2 Watanabe Sensei operates the only martial arts school in Hartfield.For simplicity,assume that consumers have identical demand curves and that Sensei knows what this demand curve is.Figure 16-2 shows this demand curve.
-Refer to Figure 16-2.Sensei's friend,Marcel,suggests that he charge a one-time membership fee to use the martial arts school,in addition to a per-class charge.Suppose Sensei charges the monopoly price for each class and also imposes a one-time membership fee.What is the maximum amount of revenue from the membership fee he can collect from all his customers?

Question

Figure 16-2  Watanabe Sensei operates the only martial arts school in Hartfield.For simplicity,assume that consumers have identical demand curves and that Sensei knows what this demand curve is.Figure 16-2 shows this demand curve.
-Refer to Figure 16-2.Sensei's friend,Marcel,suggests that he charge a one-time membership fee to use the martial arts school,in addition to a per-class charge.Suppose Sensei charges the monopoly price for each class and also imposes a one-time membership fee.What is the maximum amount of revenue from the membership fee he can collect from all his customers?

Quizplus · Accepted Answer

The maximum amount of revenue from the membership fee is equal to the area A, which represents the consumer surplus that would be lost if the membership fee were imposed.

Figure 16-2 Watanabe Sensei Operates the Only Martial Arts