Question

German brothels recently began offering a monthly subscription service for multiple purchasers. If you thought that the brothels' encouragement of prostitution was immoral to begin with, would you consider this pricing plan to be even more immoral? Suppose a particular patron at a German brothel has the following willingness-to-pay schedule for services at the brothel, per session. Session Willingness to Pay 1st $105 2nd $90 3rd $75 4th $60 5th $45 6th $30 Suppose this consumer would not demand any more sessions, even for free. Also assume that the marginal cost to the brothel, per session, is constant at $15. At a price of $82.50 per session, the number of sessions demanded by this consumer would be At this price and quantity, consumer surplus is $ and producer surplus is Suppose the brothel has devised a new pricing scheme for consumers who demand more than 1 session. This pricing scheme is a subscription service, whereby consumers can pay a flat fee of $303.75 and can have up to 6 sessions total. sessions. Under this scenario, consumer surplus is $ Using this subscription pricing model, this consumer would demand and producer surplus is (Hint: For consumer surplus, consider how much total value the consumer places on all sessions, versus the total price paid .)

Answer 1

Answer: or not: Consider the pricing plan to be even more immortal - The multiple buyers were offered a subscription Service on monthly basis by the GMB. The Gm B encourages prostitution which is thought to be immoral. The pricing plan of the amp is depended on the building mechanism. The price 98 a markup on the marginal cost before this price mechanism. . This price mechanism will increase the surplus of sellers by Extracting the consumer supplus which remained due to the markup pricing. • This will lead to increase in the patronage of the Prostitutes. • If an individual i8 opposed to the prostitution, then he will oppo se pricing scheme of the GMB.

Giren Session willingness to pay $105 2 1 1 § & E • Suppose this consumer would not demand any more sessions, even for free. Also assume that the marginal cost to the brothel, per session is constant at $15 • At price of $89.50 per session, the no of sessions demanded by this consumer would be 12 a V At this price and quantity, Consumer surplus is [$22.5 and producer surplus is 560 ). and sessions because willing nels to pay for 3 odpellion is less than Price

IW > Cs = 105 - 82.50 = 22.5 PS = 89.50–22.5 = 60 a new pricing scheme for suppose brothel has devised more than I segsion. The pricing consumer who demand Scheme is a subscription service where by consumer & can. pay a that fee of 8303.75 and can have up to бgegei GnR . 6 selline Seffions. • This consumes would dem and cs is under this [$101.5 $202.25 ps is cs = 105+90 +75+60 +45+30) – 303.75 = 405–303.15 -101.5] PS = 303.75 – 101.5=8202.287