Answer to Question #150508 in Microeconomics for very

Question

A local gym owner knows that there are two types of customers; type 1 is serious about fitness while type 2 is the casual gym go-er. He has no fixed cost and the marginal cost of providing an extra unit of service is 1/-. He has the following information
There are N_1 customers of type 1 each with the demand curve q_1=10-2p
There are N_2 customers of type 2 each with the demand curve q_1=5-p
How does his optimal strategy depend on the relative size of N_1 and N_2 if he adopts a two-part tariff pricing?

Answer 1

The optimal strategy doesn't depend on the relative size of N_1 and N_2, because the local gym owner is a monopolist, and he is a price-maker, so he will set the amounts of q1 and q2 at such level, for which MR = MC.