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Practice Set 7 - (assume 52 weeks per year to maximize...

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Practice Set 7 1. As the owner of the only tennis club in an isolated wealthy community, you must decide on membership dues and fees for court time. There are two types of tennis players. “Serious” players have demand Q1 = 10 – P where Q1 is court hours per week and P is the fee per hour for each individual player. There are also “occasional” players with demand Q2 = 4 – 0.25P. Assume that there are 1000 players of each type. Because you have plenty of courts, the marginal cost of court time is zero. You have fixed costs of $10,000 per week. Serious and occasional players look alike, so you must charge them the same prices. a. Suppose that to maintain a “professional” atmosphere, you want to limit membership to serious players. How should you set the annual membership dues and court fees
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